THORChain Co-Founder Will Ask Its Treasury About Refunding Fees From Stolen Crypto

THORChain Co‑Founder to Ask Treasury About Refunding Fees From Stolen Crypto

In a recent episode of the Unchained podcast, THORChain co‑founder Chad Barraford announced that he will bring the idea of refunding a portion of the protocol’s developer‑fund income from the Bitget hack back to the exchange. The discussion, which also featured security expert Taylor Monahan, highlighted the tension between DeFi protocols and the institutions that suffer from illicit activity routed through them.

The Bitget Hack and THORChain’s Role

On September 24, attackers stole $387.5 million from the crypto‑exchange Bitget. The stolen assets were funneled through THORChain’s cross‑chain swaps into Bitcoin, generating $573,226 in liquidity fees for the protocol up to October 2. Those fees represented 75.3 % of the $761,725 in total protocol and service fees tracked by researcher Andrey Sergeenkov.

THORChain’s governance model, which requires a two‑thirds validator majority to enact changes, means that the protocol cannot block individual swaps quickly. In the case of the Bitget hack, the protocol rejected Bitget’s request to censor the attacker’s wallets, citing its non‑censoring design.

The Debate: Profit vs. Responsibility

Monahan argued that THORChain profits heavily from stolen funds, suggesting that even a modest refund would demonstrate the protocol’s unwillingness to benefit from theft. Barraford countered that the developer fund’s share of the fees is only about 5 % and that, historically, illicit income has been a minor portion of the protocol’s revenue.

He also emphasized that node operators can choose to return their own rewards to Bitget, but that this is a personal decision rather than a protocol‑wide mandate. The co‑founder clarified that THORChain’s inability to act swiftly on individual swaps is a consequence of its consensus mechanism, not a deliberate choice to ignore illicit activity.

What the Treasury Might Do

Barraford said he will discuss with the Treasury the possibility of allocating a portion of the developer fund’s income—specifically the portion “actually under its control”—to reimburse Bitget. The exact percentage remains undecided, but the proposal signals a willingness to address the fallout from the hack.

If approved, the Treasury would redirect a share of the fees earned from the laundering swaps back to the exchange, potentially offsetting some of the losses covered by Bitget’s Protection Fund.

Practical Takeaways for the DeFi Community

1. Governance Matters – Protocols with slow consensus mechanisms may struggle to respond to rapid incidents. Clear, pre‑defined policies for handling illicit activity can help mitigate reputational risk.
2. Transparency Is Key – Publicly discussing fee flows and potential refunds builds trust with users and affected parties.
3. Node Operator Autonomy – Allowing individual validators to decide whether to return rewards can create a more flexible, community‑driven response to security incidents.

Bottom Line

THORChain’s co‑founder is exploring a refund of a portion of the developer fund’s income from the Bitget hack, a move that could set a precedent for how DeFi protocols address illicit activity routed through their networks.

TL;DR

THORChain co‑founder Chad Barraford will ask the protocol’s Treasury to refund a portion of the developer fund’s income from the Bitget hack back to the exchange, sparking debate over DeFi’s role in handling illicit funds.