THORSwap, the decentralized exchange (DEX) operating on the THORChain network, is experiencing a significant drop in the price of its native token, THOR, due to concerns over illicit fund movements. The token’s value has fallen by 55.5% in the past month, with a 36.9% decline in the last two weeks alone.
Despite implementing strict security measures and introducing new features like an integrated wallet, THORSwap’s efforts to regain user trust have not been successful in reversing the downward trend.
The decline in price can be attributed to an incident involving suspicious transactions linked to funds from the FTX hack. Elliptic, a blockchain analytics firm, reported that an anonymous hacker from the defunct FTX crypto exchange used THORSwap to convert 72,500 Ether (ETH) into Bitcoin (BTC), amounting to around $120 million at the time. The funds were then funneled through sanctioned cryptocurrency mixers, making it harder to trace.
This illicit movement of funds raised concerns within the crypto community, leading THORSwap to temporarily suspend its operations and enter a maintenance mode. The decision was made after seeking advice from legal and law enforcement advisors to prevent further misuse.
After six days of maintenance, THORSwap resumed its services on October 12, 2024, assuring users of enhanced security protocols developed in collaboration with an industry leader and compliant with anti-money laundering (AML) regulations. The updated terms of service explicitly require users to comply with AML regulations and prohibit engagement in activities that may violate sanctions.
Despite these proactive steps, there has been a debate about THORSwap’s decentralization, with users questioning if the updates align more with centralized exchanges (CEXs). However, Erik Voorhees, founder of ShapeShift, clarified that THORSwap, while built on the decentralized THORChain network, is still a centralized company responsible for decisions regarding its interface.
Amid these challenges, THORSwap integrated Exodus’ Passkeys Wallet on October 14. The wallet offers enhanced security through Multi-Party Computation (MPC) and biometrics, allowing users to create and manage wallets directly on THORSwap without traditional seed phrases, browser extensions, or email verification.
Despite the efforts to address the illicit fund movement and the integration of Passkey Wallet, the price of the THORSwap token remains in a bearish trend, with a recent 24-hour change of -23.4% and a 7-day change of -33.8%. The decline in token price reflects ongoing concerns about the incident and its impact on THORSwap’s stability.
It remains to be seen if THORSwap’s continued policy updates and technological advancements can restore investor confidence and stabilize the THORSwap token price. However, the platform’s commitment to resilience amid uncertainty is evident through its evolving policies and innovative features.