Decentralized exchange (DEX) THORSwap has resumed operations after briefly entering maintenance mode due to the detection of illicit funds on the platform.
THORSwap was posted on X (formerly Twitter) on October 12 declare The platform is back online. The platform requires users to resume regular exchanges of more than 5,500 assets across 10 blockchains from their own self-service wallets.
The protocol initially stopped swaps on its platform on October 6 as an immediate measure to deal with the potential flow of illicit funds. THORSwap admitted that its DEX platform had been subjected to illegal use and decided to suspend it to find a permanent solution to the abuse problem.
According to the latest announcement, THORSwap has yet to make any major changes to its platform, aside from “shiny new terms of service.”
Updated on October 11, THORSwap’s new terms of service read Users must comply with applicable laws such as anti-money laundering and agree not to participate in or assist any activities that violate sanctions programs or involve any illegal financial activities. The updated terms also state that THORSwap reserves the right to potentially restrict users from using the platform in the event of violations, stating:
“THORSwap reserves the right to terminate your access to the THORSwap Service at any time, without notice, for any reason, including but not limited to violation of these Terms.”
The cryptocurrency community has expressed outrage over THORSwap’s updated terms of use, with many questioning the platform’s “decentralized” status in the context of the new rules, which sound more like the rules of a centralized exchange.
“Is there any reason to use your service instead of regular CEX? Did you just copy and paste their terms of service?” An X user ask.
Erik Voorhees, founder of ShapeShift, said that THORSwap is different from THORChain (the network it built) in terms of centralization. THORSwap is a “centralized company that decides its own interface”, while THORChain is decentralized.
You are referring to Thorswap, not Thorchain.
The former is a centralized company that decides its own interface.
The latter is a decentralized protocol that does not censor any content and can be accessed in a variety of ways.
— Eric Voorhees (@ErikVoorhees) October 12, 2023
THORSwap said that in addition to updating its terms of service, it is working with “industry leaders” to put in place some additional protections to prevent illicit financial flows. The announcement added that the agreement may still require “fine-tuning in the coming days.”
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THORSwap’s return came on the same day that blockchain analytics firm Elliptic reported that hackers at now-defunct cryptocurrency exchange FTX had begun moving stolen funds in late September 2023. These transactions mark the first stolen transfer of these funds since the attack.
According to Elliptic, the anonymous hacker used THORSwap to convert 72,500 ether (ETH) (approximately $120 billion) into Bitcoin (BTC) and then sent the cryptocurrency to sanctioned cryptocurrency mixers such as Sinbad.
In a statement to Cointelegraph, a spokesperson for THORSwap emphasized that FTX exploiters’ funds can be easily traced once they are converted into BTC. But once cryptocurrencies pass through a mixer, they are no longer traceable.
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