THORChain Says It Can't Block North Korean Laundering. Is That True?

Chad Barraford (0:00)

Laundering would be blocked.

Like, anybody can become a validator. You don't have to go through me or any special process. All you have to do is buy a rune and then spin up a node and churn in, and you have a voice, right, on this protocol. You get a two-thirds majority agreeing that we should censor transactions, then sure, that would be the way of the community.

Taylor Monahan (0:22)

And it's not necessarily like the...

I think there's like this idea that for like say Bybit or Bitget, they lost so much money, and if you're only going to be able to return six figures of it, like who cares? And it does make a difference though, because it shows that, you know, it shows that you give a shit and that you don't want to be profiting from these, from this activity, right?

Laura Shin (0:43)

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Today's topic is Can and Should THORChain Do Something to Block Money Laundering by North Korea? Here to discuss are Taylor Monahan, Security Expert, and Chad Barraford, Co-Founder of THORChain.

Taylor Monahan (1:59)

Yeah, happy to be here.

Laura Shin (2:02)

So last week, Crypto Twitter had a big debate about whether or not any chains that have the ability to block or stop the laundering transactions from the Bitget hack should do so. And both THORChain and NeerIntense, there were a few others that were named as some examples of the different ways in which some of the different groups were dealing with this question. And it seems to me that the industry has settled on this notion that truly decentralized systems cannot censor, but that chains or apps that have some amount of centralized control should try to censor to protect stolen funds, users' stolen funds, if possible.

However, the greatest scorn is maybe reserved for projects that are perceived to be more decentralized in name only or dino chains that refuse to act to help victims of theft even when they can. And at least as far as I can tell, I think the majority of public perception at the moment is that THORChain perhaps lands in this last category. Chad, I'm sure you disagree. So we can start with you. Go ahead and explain why it is that you believe THORChain could not do anything to prevent the laundering of stolen funds from either Bitget or KelpDAO or Bybit or any of these other North Korean hacks.

Chad Barraford (3:21)

Yeah, sure. Well, so the first thing is that the protocol has no ability to censor individual transactions or wallets. The code doesn't even really exist to begin with.

Even if you did create the code to do the thing that you're advocating for in this moment, it wouldn't be very effectual because it takes on average about three days, sometimes up to two weeks to get a two-thirds majority of consensus from the protocol about taking this action or that action or whatever. So it wouldn't be effective to be able to block individual transactions which wouldn't be fast enough to respond. In order to be fast enough to respond, you'd have to redesign THORChain to be more centralized. I guess in theory, you could do that if the nodes collectively agree with that action, but that is not something that this protocol is generally interested in doing. Neither is Bitcoin, neither is Ethereum.

Most of these protocols are not interested in changing their design to become more centralized.

Laura Shin (4:16)

So Taylor, I know from your comments on Uneasy Money last week that you disagree with at least some of those points. So do you want to go ahead and make your case for why you think that THORChain could and should have done something?