THORSwap Resumes Operations Amid Controversy Over Updated Terms and Illicit Funds Detection
Summary:
Decentralized platform THORSwap is back online after temporarily suspending operations due to detection of illicit funds. No significant changes were made to the platform, other than updated terms of service which sparked criticism from the cryptocurrency community. Additionally, THORSwap has partnered with an industry leader to increase security measures to hinder the movement of suspicious funds. The platform's restoration coincided with reports from investigation firm Elliptic about the transactions of funds seized during the FTX crypto exchange hack.
The decentralized platform THORSwap has announced its return to functionality, following a brief maintenance shutdown when suspicious funds were identified on its platform. On October 12, THORSwap made the announcement via X (previously known as Twitter), inviting users to recommence the exchange of more than 5,500 assets on 10 Blockchain networks directly from their personal custodial wallets. Initially, on October 6, THORSwap paused exchanges on the platform as an immediate reaction to the risk of unauthorized funds transactions. THORSwap admitted its DEX platform was exploited illicitly and decided to suspend operations to devise a permanent solution to the issue.
THORSwap's latest declaration states that no significant changes to the platform have been implemented, other than an update to their "terms of service," which were revised on October 11. The updated terms specify that users are required to adhere to relevant legislation such as Anti-Money Laundering laws and prohibits engagement or assistance in activities that breach any sanction programs or involve illegal financial dealings. It also mentions that if these terms are violated, THORSwap reserves the right to restrict users' access to the platform or terminate it completely.
The updated terms have sparked criticism amongst the cryptocurrency community, who are questioning the platform's claim to be "decentralized". Many argue that the new rules sound more akin to a centralized exchange's terms. Erik Voorhees, founder of ShapeShift, highlighted the differences between THORSwap and THORChain—the network upon which it is built—in terms of centralization. He stated that THORSwap is a "centralized company that has made decisions regarding their interface", while THORChain remains decentralized.
On top of updating their terms of service, THORSwap also announced their partnership with an "industry leader" to implement additional security measures to hinder the movement of illicit funds. However, they acknowledged that adjustments may be necessary in the coming days. Notably, the reactivation of THORSwap coincided with the investigation firm Elliptic's report that the culprits behind the cypto exchange FTX hack had started to transfer the stolen funds in late September 2023. This marked the first transaction of these funds since the incident.
Elliptic reported that the unidentified hacker used THORSwap to convert 72,500 Ether (ETH), equivalent to about $120,000 million, into Bitcoin (BTC) before dispatching the crypto to blacklisted cryptocurrency mixers like Sinbad. A representative for THORSwap explained that the funds from the FTX exploit can be readily traced once converted to BTC. However, after cryptocurrencies have been run through a mixer, they become untraceable.
Published At
10/13/2023 1:59:23 PM
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