THORChain has faced criticism, labeled as a money laundering protocol after North Korean hackers exploited Bybit for $1.4 billion and began using its services to convert stolen Ether into Bitcoin. While supporters argue that THORChain remains a decentralized swap protocol, critics highlight its failures to address illicit activities. A significant proportion of the stolen funds from the Bybit incident flowed through THORChain, raising questions about the platform's governance model. Internal disputes arose when validators voted to block ETH trading to prevent hacker transactions, revealing inconsistencies in THORChain's claims of full decentralization. The dangers of regulatory scrutiny loom large, as similar protocols faced sanctions for enabling illicit finance. Experts warn that continued exploitation could lead to heightened government regulation and enforcement actions. Thus, THORChain is confronted with a critical dilemma: act to safeguard its integrity or risk intervention from authorities, which could impact its decentralized ethos and overall ecosystem.

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