THORChain Refuses to Block Stolen Funds, Sparking Debate on Permissionlessness
A recent hacking incident has sparked a heated debate in the cryptocurrency community about the limits of permissionlessness. After Bitget was hacked on September 24, $387.5 million in stolen funds moved across chains, with some heading to the decentralized cross-chain swaps platform THORChain. Chief executive Gracy Chen publicly appealed to THORChain to refuse service to attacker-linked addresses, stating 'The industry is watching.' However, THORChain refused, sparking a furious debate between those who believe protocols have a moral obligation to block stolen funds and those who hold the cypherpunk ideals of decentralized, permissionless technology sacrosanct.
Developer Boone Wheeler of THORChain argued that a truly permissionless protocol cannot block specific stolen funds, as it would no longer be permissionless. Wheeler pointed out that THORChain did halt its chain in May after an automated system triggered when an attacker exploited a vulnerability and drained over $10 million from one of its vaults. However, Wheeler claimed that this was an emergency situation and that there is 'no functionality to screen individual addresses or transactions' on the platform.
NEAR Intents, a competitor of THORChain, took a different approach and intervened to block hack-linked funds. Its automated security layer SHIELD identified more than $50 million in attempted flows linked to the Bitget incident and stopped $503,000 during execution. NEAR also waived its share of Bitget's recovery bounty.
Joël Valenzuela, a libertarian and cypherpunk, argued that permissionless protocols should not draw the line when stolen funds are identified, as being able to do so makes them permissioned. He suggested that centralized exchanges should harden their security protocols instead. On the other hand, Max Shannon, senior research associate at Bitwise Europe, believed that protocols like THORChain and NEAR still have to earn trust and that refusing to launder hack proceeds is a 'sound stance.'