- THORChain faces internal conflict after reversing a vote to block North Korean transactions.
- Lazarus Group moved $605 million in stolen ETH through THORChain, raising security concerns.
- THORChain’s highest-ever daily volume follows controversy over blocked North Korean flows.
A developer of the THORChain protocol, known only as ‘Pluto,’ has announced his immediate exit following the controversial reversal of a vote that aimed to block transactions linked to North Korean hackers. The departure follows tensions within the network as validators and the broader crypto community question the platform’s ability to mitigate illicit financial activity.
Validator Response to North Korean Transactions
The controversy began when THORChain validators, including ‘TCB,’ proposed halting Ethereum (ETH) trading on the network to prevent transactions linked to the Lazarus Group. On February 21, the Bybit crypto exchange suffered a $1.5 billion theft, allegedly orchestrated by the Lazarus Group. According to reports, nearly $605 million worth of ETH has been moved through the THORChain platform.
The vote to halt Ethereum trading was swiftly overturned. The vote to halt Ethereum trading was swiftly reverted. According to THORSwap developer Oleg Petrov, at least three validator votes are required to suspend trading on a chain, while four votes are needed to reinstate it. This process led to a further division within the protocol’s community, prompting Pluto’s resignation. The developer expressed that they would remain available to ensure a smooth transition of responsibilities but confirmed that they would no longer contribute to THORChain.
Impact on THORChain’s Validator and Network Integrity
Following Pluto’s exit, TCB, one of the validators who initially voted for the halting measure, voiced concerns over THORChain’s ability to prevent illicit flows through its platform. The validator stated they would consider leaving the network if a swift solution to prevent North Korean-linked transactions is not implemented. This has raised concerns about the protocol’s security framework, particularly regarding regulatory scrutiny and potential legal repercussions related to money laundering.
The founder of THORChain, John-Paul Thorbjornsen, stated that none of the Lazarus Group’s sanctioned wallet addresses had interacted with the protocol. He stressed how quick fund movements between networks exceed screening service capabilities. According to Thorbjornsen, THORChain does not engage in money laundering; instead, stolen Ethereum is often used as a bridge for Bitcoin transfers before funds reach centralized exchanges for fiat conversion.
Related: Bybit Receives $600M ETH From Mirana Ventures Post $1.5B Hack
THORChain’s Growth Amid Controversy
Despite concerns over illicit transactions, THORChain has experienced significant growth in transaction volumes. The protocol recorded its highest daily trading volume of $860 million on February 26. The surge in platform usage led to record-breaking transaction volumes but also heightened regulatory scrutiny, particularly from the FBI, which is investigating North Korean cybercriminal activity. THORChain is under pressure to address concerns from both validators and regulators while maintaining network decentralization and security.
