THORChain Faces Crisis as Key Developer Steps Down Amid North Korean Scandal

A developer from THORChain, known as Pluto, has announced his departure from the decentralized liquidity protocol following a contentious decision involving North Korean-linked transactions.

The controversy emerged after a vote by the network’s validators to block these transactions was swiftly overturned, raising concerns about the platform’s governance and resilience to regulatory challenges.

Validator Pushback and Rising Scrutiny

Pluto confirmed his resignation in a social media post, stating, “I will no longer be contributing to THORChain.” Despite stepping down, he pledged to ensure a smooth transition by remaining available until his responsibilities are fully handed over.

**Moving on from THORChain**

Validators, developers, members of the community: effectively immediately, I will no longer be contributing to THORChain. I will remain available to Nine Realms as long as I am needed and to ensure an orderly hand-off of my responsibilities. It has…

— Pluto (9R) (@Pluto9r) February 27, 2025

This move marks the culmination of a dispute over how the protocol should handle transactions tied to North Korean hackers. The decision to reverse the vote on blocking North Korean-linked transactions has not only led to Pluto’s resignation but has also prompted other validators to consider stepping back.

TCB, a prominent validator warned that if the platform doesn’t quickly adopt measures to prevent such illicit flows, more contributors may leave.

In their statement, TCB highlighted the scale of the issue, noting that the Lazarus Group, a North Korean hacking collective, had funneled significant amounts of stolen cryptocurrency through THORChain. This situation has brought increased scrutiny from both validators and external authorities.

I was part of the 3 validators that voted to halt $eth trading on @THORChain

I’ve been having discussions with @Pluto9r, @ol3gpetrov, @zachxbt and others about blocking the flows from ByBit hack

I hope we get a resolution before a validator resumes trading@ol3gpetrov is…

— TCB (@1984_is_today) February 27, 2025

Adding to the urgency, the FBI and other agencies have urged blockchain platforms to block transactions linked to the Lazarus Group. The group has been implicated in a series of major cryptocurrency thefts, including a record-breaking hack involving $1.5 billion in stolen funds.

Challenges to THORChain’s Decentralization Claims

The controversy has sparked a broader debate about THORChain’s claims of being a fully decentralized protocol. Critics, including some validators, have argued that the network is not decentralized enough to withstand regulatory pressure or the demands of a truly permissionless system.

TCB and others have pointed out that the protocol relies on a relatively small number of validators, making it more vulnerable to centralized influence.

THORChain’s founder, John-Paul Thorbjornsen, has stated that the protocol’s nodes are designed to follow established rules and that any node unwilling to comply can be removed.

While this ensures a degree of operational control, it also underscores the complexity of maintaining a balance between decentralization and effective governance.

Thorbjornsen has further emphasized that THORChain nodes have not been directly implicated by authorities, and he asserts that the platform’s design is intended to enable open, permissionless swaps.

Following this news, THORChain’s native token RUNE has seen a significant plummet, dropping by 14.3% in the past day to a current trading price of $1.31.

Featured image created with DALL-E, Chart from TradingView