Decentralized exchange THORSwap has resumed operations after a brief pause that occurred in response to the detection of illicit funds on its platform.
The news comes after it was reported that an anonymous FTX exploiter used THORSwap to convert a large amount of Ether (ETH) into Bitcoin (BTC), which is traceable on-chain.
The platform announced its return to activity on October 12 on its official X account. Taking advantage of this opportunity, THORSwap asked its users to resume their scheduled swaps, involving over 5,500 assets on 10 blockchains, directly from their personal custody wallets.
THORSwap is back online! Please resume your regularly scheduled swapping of over 5,500 assets across 10 blockchains, right from your own self-custody wallet.
What's changed? Other than the shiny new terms of service, users won't notice a thing. Behind the scenes, we've partnered…
— THORSwap ⚡ #BetterThanCEX (@THORSwap) October 12, 2023
The pause in THORSwap operations was initially implemented on October 6 as an immediate measure to address the potential movement of illicit funds. The platform recognized that it had been misused and decided to take a break to find a permanent solution to prevent future misuse.
One of the most notable modifications is the updated terms of service, which includes the requirement that users comply with applicable laws, particularly those related to anti-money laundering.
The updated terms in 11 of october, also state that THORSwap reserves can restrict users in case of violations, while maintaining a focus on regulatory compliance and security.
However, this update has sparked controversy in the cryptocurrency community, which has expressed concerns about the changes to the terms of use. Many question whether the platform is still truly decentralized or if it is moving towards a more centralized approach.
Erik Voorhees, founder of ShapeShift, noted that THORSwap differs from THORChain, the network on which it is based, in terms of centralization. THORSwap is a centralized entity that has made decisions about its own interface, while THORChain remains decentralized.
You’re referring to Thorswap which is not Thorchain.
The former is a centralized company that made a decision about their own interface.
The latter is a decentralized protocol that isn’t censoring anything and can be accessed in myriad ways.
— Erik Voorhees (@ErikVoorhees) October 12, 2023
A return on new terms
In addition to the changes to the terms of service, THORSwap has reported that it has established a partnership with an “industry leader” to add additional layers of security and prevent the flow of illicit funds in the future. The platform has also made it clear that additional adjustments may be required in the coming days.
The return of THORSwap coincides with a report from blockchain analysis firm Elliptic, which revealed that the anonymous hacker behind the FTX exchange attack has begun moving stolen funds through THORSwap and converting them into Bitcoin. These transactions mark the first time these funds have moved since the attack.
According to Elliptic, the hacker used THORSwap to convert around 72,500 Ether (ETH), worth about $120 billion, into Bitcoin, before sending the cryptocurrencies to sanctioned cryptocurrency mixers. The platform has emphasized that once cryptocurrencies pass through a mixer, they become untraceable.
