THORChain and NEAR both call themselves permissionless, but they acted very differently when Bitget got hacked, and now crypto lawyers are arguing over whether either of them actually is.
The backstory: an attacker exploited a vulnerability and drained over $10 million from one of THORChain’s vaults in May. Validators voted to halt the chain. NEAR’s cross-chain competitor, NEAR Intents, did the opposite. Its automated security layer, SHIELD, blocked over $50 million in attempted flows linked to the Bitget incident and stopped $503,000 during execution. Another $166,000 passed through.
“A truly permissionless protocol can do nothing when it encounters known stolen funds — it would be blind to their provenance.”
That’s the core of the debate. Bitget CEO Gracy Chen argues THORChain should refuse services to known stolen funds. NEAR Intents took the opposite approach, and critics say that demonstrates it isn’t permissionless.
The THORChain Halting
THORChain says its system is intentionally blind to individual addresses. The protocol automatically halts activity when its solvency checks detect an insolvency event, and node operators can then pause trading, signing and other network activity.
THORChain’s post-mortem of the May exploit explained the design choice: “no functionality to screen individual addresses or transactions.” It was “intentionally designed to be truly permissionless,” according to THORChain’s Wheeler.
But the company has shown it can intervene. When the Bitget attack hit, the chain was halted.
NEAR’s Automated Screen
NEAR Intents says SHIELD is different because it’s automated. Crypto lawyer Yuriy Brisov believes automated systems could still fall within the protections afforded to decentralized protocols.
“There is no compliance team, people who sit there and control the operation manually. This is a smart solution, and that’s what we recommend to all the DeFi companies.”
NEAR General Manager Alex Shevchenko says SHIELD uses public onchain data and signals from an internal anti-money laundering (AML) database and third-party intelligence providers. He argues the tool protects “the whole cross-chain ecosystem it serves.”
What Bitget Wants Now
Chen says Bitget understands different protocols have “different architectures, governance models and technical capabilities,” but she draws a line at facilitating stolen funds.
“We appreciate that response and will follow the appropriate legal and recovery process for those assets.”
She wants to know “what is technically and governance-wise possible when stolen assets are identified,” and whether the industry can find workable approaches together.
“Permissionless infrastructure does not necessarily mean there can be no mechanisms for detecting and responding to known illicit flows.”
The Libertarian Case Against Intervention
Not everyone agrees with Chen’s position. Joël Valenzuela, a libertarian and cypherpunk who heads business and development for Dash, argues that permissionless means exactly that.
“Permissionless protocols, quite frankly, should not draw the line anywhere when stolen funds are identified, because being able to do so at all makes them permissioned.”
Valenzuela says stepping in to stop stolen funds opens Pandora’s Box. Instead, he wants centralized exchanges to harden security protocols, and he backs DEXs as the future.
Where This Goes
The dispute is messy. THORChain halted the chain, which contradicts its claim to be permissionless. NEAR Intents intervened, which also contradicts its claim to be permissionless. Both have defenders and critics.
Max Shannon, senior research associate at Bitwise Europe, says young protocols like THORChain and NEAR still have to earn trust, and he calls refusing to launder hack proceeds a “sound stance.”
The irony is that both sides are arguing about decentralization while acting in ways that look centralized. One halted the chain. The other relied on an automated system to block flows. Neither can credibly claim to be fully permissionless.
The question now is whether either project can convince critics that its approach is sustainable.
Key Facts
- Attack drained over $10 million from a THORChain vault in May
- Validators voted to halt the THORChain chain
- NEAR Intents’ SHIELD blocked over $50 million in attempted flows
- SHIELD stopped $503,000 during execution, let $166,000 pass through
- Bitget CEO Gracy Chen argues THORChain should refuse services to known stolen funds
- Joël Valenzuela backs DEXs as the future
Source material: “Furious debate about THORChain vs NEAR shows idealism has limits,” Cointelegraph.
Get the Notebook.
The day's best stories and every fresh verdict, in plain English, in your inbox by seven. One email a day, no more.