THORSwap Temporarily Halts Swap Operations Amid Money Laundering Concerns

THORSwap Temporarily Suspends Swapping Services Over Hacker Money Laundering Issues

Background

As reported by Coin68, there has been a surge in concerns regarding the use of THORSwap for laundering money obtained from various high-profile hacks. These hacks include Stake.com, Atomic wallet, and the infamous FTX hack, where stolen assets were often converted into Bitcoin via THORSwap.

According to data compiled by the X account @tayvano_, about 65% of the stolen funds in these incidents were processed through THORChain's THORSwap. This statistic sparked intense debate between tayvano_ and other users, as well as an official response from THORChain.

The THORChain account clarified that no member of their organization condones or celebrates the illicit flow of funds. In the last three months, THORChain processed $1.6 billion in transaction volume, with illegal funds constituting less than 3% of this total. Additionally, ETH to BTC swaps did not dominate the transaction volume.

Recent Developments

On October 5, THORChain reported an all-time high (ATH) in transaction volume, surpassing $355 million in a single day. Over the past five days, the cumulative transaction volume exceeded $1 billion. This spike is suspected to be influenced by hackers frequently converting stolen ETH to BTC via THORSwap. Notably, the FTX hacker recently moved over 60,000 ETH (approximately $100 million). In the last four months, more than 50% of the funds processed through THORSwap routers were stolen assets.

THORSwap's Response

On October 6, THORSwap's official X account acknowledged the misuse of their platform by hackers to launder stolen funds. After consulting with advisors and legal experts, THORSwap decided to temporarily switch its interface to maintenance mode to promptly prevent any further illegal transactions.

The project has yet to disclose additional measures that could permanently thwart hacker activities or provide a timeline for ending the maintenance mode. Meanwhile, THORSwap will continue to offer services like liquidity provision (LP), borrowing, lending, and staking despite the suspension of token swapping.

Announcement from THORSwap:

"To address the ongoing misuse of our platform by hackers, THORSwap has decided to temporarily switch to maintenance mode. This is a provisional measure aimed at stopping any illegal transactions. Our other services, including LP, borrowing, lending, and staking, will remain unaffected as we work on a long-term solution to ensure the safety and integrity of our protocol."