Decentralized exchange THORSwap has resumed its operations after temporarily going into maintenance mode to address the detection of illicit funds on its platform. On October 12, THORSwap announced its return to X (formerly Twitter) and urged users to continue swapping assets across multiple blockchains using their own self-custody wallets.
The decision to halt swaps on the platform was made on October 6 as a precautionary measure to counter any potential movement of illicit funds. THORSwap acknowledged that its DEX platform had been misused and took a pause to find a permanent solution to the issue.
According to the latest update, THORSwap has not implemented any significant changes to its platform apart from the introduction of “shiny new terms of service.” These updated terms, released on October 11, require users to comply with applicable laws such as Anti-Money Laundering regulations and abstain from engaging in any activity that violates sanctions programs or involves unlawful financial practices. Additionally, the updated terms state that THORSwap reserves the right to restrict user access to the platform in the event of violations.
The updated terms of service received criticism from the cryptocurrency community, with concerns raised about THORSwap’s “decentralized” status in light of the new rules, which resemble those of centralized exchanges. One user on X questioned the need to use THORSwap instead of a regular centralized exchange, suggesting that the terms of service seemed copied from such exchanges.
ShapeShift founder Erik Voorhees clarified that THORSwap and THORChain are different entities in terms of centralization. THORSwap is a centralized company that made decisions regarding its own interface, while THORChain remains decentralized.
In addition to the changes in terms of service, THORSwap reported a partnership with an industry leader to adopt additional measures preventing the flow of illicit funds. The protocol may still require fine-tuning in the days to come, as mentioned in the announcement.
Coincidentally, THORSwap’s return occurred on the same day that blockchain analytics firm Elliptic reported the movement of stolen funds from the now-defunct crypto exchange FTX. The hacker had started moving the stolen funds, marking the first activity involving the funds since the attack. Elliptic revealed that the anonymous hacker used THORSwap to convert 72,500 Ether (ETH), equivalent to around $120,000 million, into Bitcoin (BTC), before sending the crypto to sanctioned cryptocurrency mixers like Sinbad.
A spokesperson for THORSwap emphasized that once the exploiter’s funds have been swapped to BTC, they can be easily traced. However, once cryptocurrencies have passed through a mixer, their traceability is lost.
Moving forward, THORSwap aims to strengthen its platform’s security and ensure compliance with regulations to prevent illicit activities. The resumption of operations demonstrates the platform’s commitment to providing a secure and reliable decentralized exchange for users to swap assets across different blockchains.