The Lazarus Group has successfully laundered $1.5 billion in stolen Ethereum (ETH) from the Bybit hack, converting it into Bitcoin (BTC) using the decentralized exchange (DEX) THORChain.
This has sparked concerns in the crypto community, with many criticizing THORChain for allowing these transactions. In response, THORChain defended itself, stating that its decentralized and open-source nature means it does not act like a law enforcement agency to monitor transactions.
Arkham Intelligence, a blockchain analytics firm, confirmed that the Lazarus Group moved 500,000 ETH, mostly turning it into Bitcoin. This laundering operation is one of the largest in crypto history. Since the hack, THORChain has processed over $5.5 billion in transactions, with a significant amount linked to the stolen funds.
Some users have accused THORChain validators of negligence for not stopping these transactions. Critics noted that THORChain earned a $3 million fee during this event but did not prevent the large fund transfers. This situation raises questions about the role of decentralized exchanges in facilitating illegal activities without oversight.
Supporters of THORChain argue that it is unrealistic to expect a decentralized exchange to censor transactions. They believe that as an open-source project, THORChain is not meant to be a regulatory body. The debate highlights the risks of decentralized finance (DeFi), where exploitation can occur if the community is not vigilant.
After the hack, THORChain’s token, RUNE, briefly increased in value due to high transaction volume but later lost those gains. The controversy over THORChain’s role in laundering Bybit funds could harm its reputation for years. Critics suggest that validators may have acted in their own self-interest, which could have negative long-term effects on the industry.
The Lazarus Group’s actions reveal ongoing issues in DeFi platforms, where the lack of central authority creates vulnerabilities for financial crimes. As more funds are laundered through decentralized systems, the debate about their role in the crypto ecosystem will likely grow. THORChain’s involvement highlights the challenge of balancing innovation with responsibility in the DeFi space.
