RUNE Plummets 9% as Thorswap Freezes Operations Amid ‘Potential Illicit Activity’

Thorswap, a decentralized exchange (DEX) that supports multiple blockchains atop the Thorchain network, announced that it had paused activity.

The exchange has moved to “maintenance mode” after detecting a series of illicitly-linked funds had been funneled through the platform.

The native token powering the Thorchain network RUNE has since plummeted by 9%, per CoinGecko data. The token is now trading hands at $1.88.

Thorswap will remain paused until it is able to implement “a more durable and comprehensive solution” to improve security.

“A pressing and persistent concern has recently come to light: the potential movement of illicit funds through THORChain and, specifically, THORSwap,” the exchange wrote. “Such activities have no place on the THORSwap platform, and THORSwap stands firmly against any and all criminal actions.”

In a subsequent update, Thorswap clarified that functions such as “LP actions, Earn (for savers), Borrow (lending), and Staking actions” continue to be fully accessible.

At present, there’s no specific timeline as to when the platform will return to full operations.

“THORSwap stands firmly against any and all criminal activity—especially on the THORSwap platform,” a representative of the Thor community reached via Discord told Decrypt.

Ilicit transactions linked to FTX hack

The dubious transactions are believed to be associated with an FTX hack from November 2022, where an unidentified entity drained multiple wallets, amounting to about $600 million.

Crypto investigation agency Arkham Intelligence revealed on September 30 that the anonymous hacker channeled over 15,000 Ethereum through several platforms, Thorswap being one of them.

After the platform halted its operations, members of the Thor community criticized the way the team handled the situation.

Taylor Monahan founder of MyCrypto Wallet and product manager at MetaMask said that she had been raising the alarm around this precise issue for months.

“Your incentivized shitshills are cluttering my notifs and your recent volume bump was solely bc criminals laundered the atomic wallet hack via thorchain,” Tayvano wrote in a post on July 10.

Backing Tayvano’s claim, co-founder of Bidali Eric Kryski said he had already traced a significant portion of stolen funds to Thorchain last July.

Many community members also expressed their disappointment about Thor team actions, likening their response to that of centralized exchanges, pausing operations without community consultation.

Others in the community recalled a similar incident with Uniswap, calling the Thor team to take inspiration from the way it handled the issue.

In April 2022, Uniswap started blocking wallets linked to illicit actions. Over the subsequent months, they’ve blocked 253 crypto wallet addresses, without halting the exchange activities.