THORChain's Decentralization Defense Faces Scrutiny Amid Bitget Hack

THORChain's decision to allow the swapping of stolen Bitget funds has sparked controversy and raised questions about its decentralization. The $387.5 million hack on Bitget occurred last week, with investigators quickly tracing the recipient addresses.

In a statement, THORChain argued that it is decentralized and permissionless like Bitcoin, Ethereum, and BNB Chain, and therefore should not be responsible for handling known stolen funds.

However, this stance has been met with criticism, particularly given THORChain's own experience of being hacked in May, resulting in the loss of $10.7 million. At that time, the protocol was halted immediately, but now it appears to have an inability to block certain addresses even if it wanted to.

NEAR Intents, on the other hand, took a different approach by blocking the addresses linked to the hack and refusing to swap funds from them. This decision has been seen as a more proactive measure against illicit activity.

In a conversation with Magazine, Yuriy Brisov from D&A Partners discussed the legal implications of THORChain's actions. Brisov noted that while decentralization is often cited as a defense for DeFi protocols, it can also be used to argue that they have control over assets and therefore open themselves up to claims of negligence or recklessness.

Brisov emphasized that if a protocol shows control over assets, even in a good-faith attempt to prevent fraud, it can lead to liability. He noted that NEAR Intents' automated SHIELD program is more likely to be seen as decentralized due to its use of smart solutions and lack of manual intervention.