Lazarus Group Completes Laundering of Bybit Stolen Funds Using THORChain

The Lazarus Group has successfully laundered all the funds obtained from the recent Bybit hack, utilizing THORChain’s decentralized exchange (DEX) for the conversion of stolen Ethereum tokens. This has led to significant outcry from the community.

Many users have criticized THORChain validators for their perceived inaction during the laundering process, arguing that they could have intervened. Conversely, supporters of THORChain have defended the platform, emphasizing its open-source and decentralized nature, which does not inherently lend itself to functions akin to law enforcement.

The Money Laundering Operation

Arkham Intelligence, a blockchain analytics firm, has shed light on this troubling development, noting its involvement in tracing the recent Bybit hack, which saw a staggering $1.5 billion in Ethereum stolen. Following their investigation, they confirmed that the Lazarus Group had successfully laundered the entirety of the stolen funds.

“Lazarus has now fully laundered the proceeds of the Bybit hack. They have transferred 500,000 ETH mainly to native BTC. THORChain has recorded over $5.5 billion in transaction volume since the Bybit hack on February 21,” Arkham claimed via social media.

The Bybit hack has now become a notorious event, marking the largest known incident of crypto theft to date. Just two days prior, analysts had indicated that Lazarus had already laundered approximately 70% of the stolen assets. However, the rapid progress of this operation was alarming.

Recently, Bybit CEO Ben Zhou remarked that a staggering 83% of the stolen Ethereum had already been converted to Bitcoin, with the entire amount being laundered shortly thereafter.

In addition to this, Zhou stated that THORChain facilitated the laundering of nearly 72% of Bybit’s assets, as most transactions converting ETH to BTC traversed this decentralized exchange.

Furthermore, the trading volume on THORChain saw dramatic spikes as a direct result of these transactions, surpassing the levels of several more established networks.

In the aftermath of this scandal, some members of the community began to blame THORChain for the incident. A user noted the significant amounts of Bybit’s funds that were laundered, questioning why the exchange did not take action.

Despite the chaos, it's notable that THORChain earned around $3 million in fees from the transactions involved. Defenders of THORChain have stressed that it operates under an open-source and decentralized model, which cannot easily be held accountable for preventing illicit activities.

“The only reason why people feel that THORChain should censor transactions is the general feeling that if they put enough pressure on Node Operators, they will buckle under pressure (which honestly can happen),” remarked Runemir, Chief Narrative Officer at Qi Capital.

This situation underlines the complications within decentralized financial systems. If the Lazarus Group can exploit these platforms to launder massive sums, it poses fundamental questions about the vulnerabilities of such decentralization.

On the flip side, while criticisms of THORChain are valid, the notable spike in THORChain’s RUNE token due to the increased trade volumes indicates that some financial gains were made, although these gains have since faded.

THORChain's association with this laundering affair is likely to leave a shadow over its reputation for years to come, reflecting poorly on its validators' decisions. As the story unfolds, it remains evident that motivations in this field are complex and intertwined, as the Lazarus Group continues to highlight the flaws in the crypto space.