THORChain Refuses Bitget's Request to Block Hack-Related Addresses

THORChain, a decentralized cross-chain swaps protocol, has been caught in a dispute over its handling of funds tied to a recent hack at Bitget, a cryptocurrency exchange. The hack resulted in $387.5 million being stolen, and investigators were able to quickly identify and trace the recipient addresses.

Bitget then asked THORChain to 'refuse service' to those addresses, but THORChain rejected the request on the grounds that it is permissionless, like major public blockchains such as Bitcoin and Ethereum. The decision has reignited a broader debate in DeFi about whether decentralized protocols should block funds tied to hacks.

THORChain's position is that blocking certain addresses would weaken its claim of being decentralized. However, some argue that this stance could lead to liability risks if the protocol can selectively interfere with transactions. In fact, THORChain has previously been used in routing around large stolen-fund incidents, which raises questions about its role in facilitating illicit activity.

NEAR's Intents ecosystem, on the other hand, uses an automated program called SHIELD to block address-based access and prevent stolen funds from being swapped. This approach may be viewed more favorably than manual intervention from a decentralization-liability standpoint, as it does not involve human judgment or discretion.