THORChain has declined a request from cryptocurrency exchange Bitget to blacklist addresses linked to a major hack, allowing a suspected attacker to convert roughly $6 million worth of stolen ether into bitcoin through the decentralized protocol.
The Movement of Stolen Funds
According to on-chain analysis by CoinDesk, the entity behind the theft executed 27 successful swaps through THORChain, converting approximately 2,390 ETH into 75.2 BTC. The transactions proceeded uninterrupted despite mounting pressure from Bitget, which had publicly appealed to the protocol to stop processing transactions tied to the addresses.
The conversion of ether to bitcoin is a common laundering technique among attackers, who often route funds through decentralized services that lack the centralized controls of traditional exchanges. THORChain, which enables cross-chain swaps without a central authority, has become a frequent tool in such operations.
The funds kept moving, exposing the limits of appealing to a protocol built to resist censorship.
Bitget's Failed Appeal
Bitget urged THORChain to block the addresses connected to a theft totaling $387.5 million, but the request ran up against the fundamental design of the decentralized protocol. THORChain operates through a distributed network of node operators and validators, making unilateral censorship difficult to enforce even when a request comes from a prominent industry player.
The episode highlights an ongoing tension in the crypto sector between the ideals of permissionless, censorship-resistant infrastructure and the practical need to prevent bad actors from cashing out illicit gains. Centralized exchanges can freeze accounts and cooperate with law enforcement, but decentralized protocols largely cannot.
- CoinDesk documented 27 successful swaps through THORChain.
- Roughly 2,390 ETH was converted into 75.2 BTC.
- The broader theft in question totaled $387.5 million.
A Recurring Dilemma
THORChain has faced similar scrutiny in past incidents, including its use in laundering funds from other high-profile hacks. Critics argue the protocol has become a preferred conduit for stolen assets, while supporters maintain that censorship at the protocol level would undermine the core principles of decentralization.
For now, the standoff underscores how limited the options are for victims and exchanges seeking to intervene once funds enter a decentralized system. Without built-in