Key Takeaways:
- THORChain validator TCB revealed he played a role in halting ETH transactions to stop Bybit hackers from laundering funds.
- Chief developer Pluto announced his resignation, signaling internal challenges within the network.
- TCB warned that the situation had escalated beyond crypto, becoming a national security issue.
THORChain, a decentralized liquidity network, is facing internal turmoil after key figures within its ecosystem raised concerns over its security vulnerabilities and governance structure.
TCB was part of three verifiers who were responsible for suspending Ethereum transfers in THORChain who came forward to expose that the process was to prevent stolen money laundering by North Korea-related hackers through the system. This was preceded by an explosive announcement that the issue had crossed blockchain to border an area related to national security.
Pluto, THORChain’s lead developer, further fueled the situation, announcing his resignation. Pluto revealed in an X post that he was not working on the project anymore but was assisting Nine Realms, an integral part of the THORChain crew, in making things easier during the transition.
In response, TCB was dissatisfied with the network’s governance, citing that its decentralized status was an illusion. TCB maintained that a select number of entities in North America controlled most THORChain infrastructure and user flow.
Contrary to the network’s foundational beliefs, he revealed that key individuals in this decentralized-branded venture can shape major decisions.
Censorship and Centralization Debates
One of TCB’s key criticisms was the network’s refusal to embrace stricter transfer screening. He asserted that while infrastructure providers and wallet integrations have been censoring in practice, it was still facilitating illicit transfers in the guise of being decentralized.
He employed Chainflip, an alternate between-blockchains system, to demonstrate that this can be done by providing additional security without breaching core blockchain principles.
TCB suggests that THORChain is vulnerable to regulatory crackdowns in the style of Tornado Cash unless it changes, citing an emerging divide between compliance hawks and crypto purists. TCB described that THORChain is limited by complexity in accommodating new validators compared to thousands of Ethereum and Bitcoin validators. As fewer entities translate to increased vulnerability to regulation.
The Future of THORChain
The point is whether THORChain is to adjust to greater regulatory scrutiny or to keep proceeding in its current trajectory, risking jeopardizing itself in the process. As TCB threatens to depart himself unless solutions are put in motion in short order, the protocol is in an unknown future.
For now, THORChain is in this in-between phase where future moves will decide whether it can endure these tests or prove to be yet another cautionary tale in this emerging decentralized finance era.
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