TLDR
- Alarmed by the misuse of their platform by North Korean hackers, prominent developers from Thorchain, including the de-facto leader Pluto, are stepping down.
- Funds from the recent audacious $1.5 billion Bybit heist are being channeled through Thorchain by the notorious Lazarus Group.
- To combat money laundering, core developers exercised their authority to suspend ETH transactions temporarily.
- Centralization issues have surfaced at Thorchain due to their limited validator set and demanding infrastructure requirements.
- In light of continuing illicit fund activities, wallet providers may sever ties, posing a threat to the protocol's future vitality.
A significant exodus of developers is underway at Thorchain, propelled by concerns over North Korean hackers exploiting the platform for cryptocurrency laundering. Among those leaving is Pluto, an unofficial leader of the protocol.
The crisis erupted when North Korea’s infamous Lazarus Group began using Thorchain to shuffle Ethereum stolen in a massive Bybit hack resulting in a $1.5 billion loss.
TCB, a pivotal figure in the project, has threatened to depart unless prompt measures are taken against unlawful fund movements, thus joining Pluto in a wave of fleeing technical talent.
The person who has effectively steered development is preparing to depart from Thorchain. @THORChain
As previously mentioned, I plan to exit if a solution to halt North Korean fund flows isn't quickly devised, likely marking my final contributions to the TC discussion.
The TC… https://t.co/FUddEn91yu
— TCB (@1984_is_today) February 27, 2025
Recently, three key developers, including TCB, Pluto, and Oleg Petrov, utilized their validator authority to halt ETH trades on the platform, a move aimed at thwarting the Lazarus Group’s laundering operations.
An internal contradiction in Thorchain’s operations has been unveiled, as TCB disclosed that a corporate minority controls major aspects of the network despite its censorship-resistant branding.
Thorchain’s architecture has inadvertently fostered centralization, distinguishing it from cryptocurrencies like Bitcoin and Ethereum, which boast thousands of independent validators versus Thorchain's few.
The requirement for complete infrastructure replication across supported blockchains has hindered Thorchain's onboarding of new validators, further restricting decentralization.
Network Limitations
Reform attempts met resistance, with lighter node proposals and validator expansion failing to gain traction within the protocol's governance.
While others in the sector have acted at the network level against censorship, Thorchain lags behind with no such measures in place even as Chainflip has implemented protections.
Numerous wallet providers already utilize transaction filtering and may consider dissociating from the protocol if illicit flows continue, posing risks to Thorchain’s operations.
Losing wallet providers could cut off Thorchain from legitimate liquidity sources, and paired with increased scrutiny, this threatens the protocol's existence.
The present turmoil surpasses typical governance disputes within protocols. TCB emphasized that dealings involving sanctioned state-linked stolen funds elevate the situation to a national security issue.
Thorchain risks enforcement actions that could jeopardize its operations, as regulators may perceive the protocol as an accomplice in widespread money laundering.
The protocol’s cross-chain asset swap capabilities make it an appealing venue for malicious actors trying to blur the trail of stolen assets.
TCB stressed that failure to swiftly rectify these challenges could steer Thorchain into a critical state, with the exodus of developers, regulatory pressure, and losing credible partners forming a formidable threat to its continuity.
