Unchained - THORChain Says It Can't Block North Korean Laundering. Is That True?

Episode Date: October 7, 2026

In this spicypost-Bitget hack debate, THORChain co-founder Chad Barraford says the protocol can't block laundering. Taylor Monahan points to the halts it has used before. ======================================================== Thank you to our sponsor! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 1inch.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to swap tokenized securities, crypto and more. Simple. Secure. Self-custodial. Whatever asset you’re buying - swap it at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 1inch.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ======================================================== Quick favor: We're deciding what Unchained does next; new shows, stream times, what's worth paying for.⁠⁠⁠⁠ Our listener survey⁠⁠⁠⁠ takes five minutes, it's anonymous, and I read the write-in answers myself. Everyone who takes it can enter a drawing for a free year of Unchained Premium or Bits + Bips Premium. Open through Sunday, October 18. — Laura ======================================================== The Bitget hack reignited a fight on crypto Twitter: should chains that can stop North Korea from laundering stolen funds actually do it? THORChain, which DPRK hackers keep using to reach Bitcoin, landed at the center of it. Chad Barraford, co-founder of THORChain, argues the protocol cannot respond fast enough without redesigning it to be more centralized. Security expert Taylor Monahan counters that THORChain has acted before when its own protocol was at risk, and that routes made up almost entirely of stolen funds could simply be switched off. Laura Shin presses on the closed-source signing library, four operators running 39 nodes, why validators left after Bybit, ZachXBT's undercover look at a launderer pitching THORChain, Tornado Cash-style legal risk, and fee spikes after the KelpDAO and Bitget hacks. Barraford's answer to the biggest hypothetical is simple: if enough node operators want to block laundering, it gets blocked. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Laura Shin⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Host / Unchained Guests: Taylor Monahan - Security Expert and Co-host of Uneasy Money Chad Barraford - Co-founder of THORChain Timestamps ⚖️ 01:56 The Bitget debate: should chains that can block laundering do it? 🧱 04:10 Why Taylor says THORChain has been 'making this excuse' for years ⏸️ 10:48 THORChain paused for 5 weeks for itself. Why not for stolen funds? 🪙 19:15 1inch Aqua: See how LPs can back multiple positions with one token balance at http://unchainedcrypto.com/go/1inch-yt 🏦 20:15 Is THORChain an intermediary? The custody critique of its TSS vaults 🚪 24:32 Why did validators leave after Bybit? Chad and Taylor disagree 🧪 39:36 Does THORChain pass Chad's own decentralization litmus test? 🕵️ 47:59 ZachXBT's undercover probe: a launderer's 'Thor cross-chain' pitch 🏛️ 57:24 Could THORChain face a Tornado Cash-style case? Chad's legal defense 🛡️ 01:05:05 NEAR's Shield stopped $50M in laundering. Could THORChain copy it? 💸 01:05:57 Does THORChain profit from stolen funds? The fee spike debate Learn more about your ad choices. Visit megaphone.fm/adchoices

laundering would be blocked. Like anybody can become a validator. You don't have to go through me or any special process. All you have to do is buy a ruin and then spin up a node and churn in and you have a voice right on this protocol. And if you get a two-thirds majority agreeing that we should censor transactions, then sure, that would be the way of the community. And it's not necessarily like the, I think there's like this idea that for like say buy

a better betcha, they lost so much money. and if you're only going to be able to return six figures of it, like who cares? And it does make a difference, though, because it shows that you give a shit and that you don't want to be profiting from this activity. Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream, and first we'll take a quick word from the sponsors who make this show possible.

This episode is brought to you by One Inch Aqua, the Sherid LaQuist, layer from 1 inch, back multiple liquidity positions with one wallet balance, and keep your tokens in your wallet until a swap fills. See how it works at 1inch.com slash aqua. Before we get started, I want to ask you for something. We're making a bunch of decisions right now about unchained. What we make next, when we go live, what we should be doing more of, and I'd rather hear from you before we make them than after. So we put together a survey. It takes just a few minutes, it's anonymous, and there's a box where you can tell me what we could be doing better. I read all the responses. The link is in the show notes, or you can snap the QR code on screen,

or go to unchainedcrypto.com slash survey. Thanks. Today's topic is can and should Thorchain do something to block money laundering by North Korea. Here to discuss our Taylor Monaghan, security expert, and Chad Bariford, co-founder of Thorchain. chain. Welcome, Taylor and Chad. Thank you for me. Yeah, happy and be here. So last week, CryptoTwinter had a big debate about whether or not any chains that have the ability to block or stop the laundering transactions from the Bicket hack should do so.

And both Thorchain and Near Intense, there were a few others that were named as some examples of the different ways in which some of the different groups were dealing with this question. And it seems to me that the industry has settled on this notion that truly decentralized systems cannot censor, but that chains or apps that have some amount of centralized control should try to censor to protect stolen funds, users' stolen funds, if possible. However, the greatest scorn is maybe reserved for projects that are perceived to be more decentralized in name only or dino chains that refuse to act to help victims of theft even when they can. And at least as far as I can tell, I think the majority of public perception at the moment is that Thorchene perhaps lands in this last category.

Chad, I'm sure you disagree. So we can start with you. Go ahead and explain why it is that, you know, you believe Thorchene could not do anything to prevent the laundering of stolen funds from either Bickett or Kelpdowne or Bybit or any of these other North grant hacks. Yeah, sure. Well, so the first thing is that the protocol has no ability to censor individual transactions or walls. The code doesn't even really exist to begin with. Even if you did create the code to do the thing that you're kind of like advocating for in this moment, it wouldn't be very effectual because it takes on average about three days, sometimes at the two weeks to get a two-thirds majority of consensus from the protocol about, you know, taking this action or that action

or whatever. So it wouldn't be effective to be able to block individual transactions, which wouldn't be fast enough to respond. In order to be fast enough to respond, you'd have to redesign Thorchain to be more centralized. And I guess in theory, you could do that if the nodes collectively agree with that action. But that is not something that this protocol is generally interested in doing. Neither is Bitcoin, neither is Ethereum. You know, most of these protocols are not interested in changing their design to become more centralized. So, Taylor, I know from your comments on uneasy money last week that you disagree with at least some of those points. So do you want to go ahead and make your case for why you think that Thorchain could and should have done something?

Well, I think that it's important to keep in mind that this isn't a new situation. They've been making this excuse since, well, since streaming swap started being used by illicit actors, which has been about three, four years now. So every time there's a big hack And it's not just North Korea, but North Korea does really like Thornton, you know, this conversation is hard. And since the very first time, it's always been we can't do anything,

we can't do anything, we can't do anything. However, in a lot of situations, we actually learned that they could do something. So for example, for two of those four years, three of those four years, we know now that JP, had an admin key. Chadd, that's J.P.

Thor B. Brinson, who's one of the co-founders, yeah. Yeah. I think Chad also had an admin key. Is that a question? Yeah. Well, let me just I mean, do you want to talk about the admin key? Like, that's, I think it's like an important thing

over time. Yeah, let me talk about it. Okay. So the admin key is actually my fault. Actually, one of the mistakes I made in this protocol is that when I had designed and built this protocol, the mistake I made is to call it the admin key. It's really not an admin key the way we think of it. I mean, even Bitcoin had an admin key that wasn't an admin key in the earlier days. But it's really more of a provisional or interim key, I guess. It doesn't have any authority over the protocol. It can make configuration changes and the nodes can override those changes. Like, hypothetically, if somebody were to

release the nymonic phrase of the private key of the admin key, quote unquote, it would be a griefing attack. Services might turn on or off until the nodes vote to over. override whatever the thing was that was changed until the key can be removed and a new one put in or whatever. It's really not an admin key, and it's my mistake for calling that in the first place. But the admin key was used to realleliorit assets in the past. No, it's never been used for that purpose. It's not possible. So what was it? So in the past, when the admin key was used, how would you describe it being used? Yeah.

Just so that we can be on the same page. Sure. It's just predominantly used for configuration. You can't, you can't stop trades. You can't withdraw funds. You can't, you know, take somebody's transaction. You can't, I mean, it's just a configuration. Like I said, you could have made a public and it would have been a grief attack in the protocol. Would have not have been good, but it would not have been a big deal.

Okay. So when we talk about the Thorify incident, right? And the admin key was used. What would you say that it was used? What, like, actions specifically were taken with the admin key? The admin key was used to pause the fact. feature of lending in that case, which that's a configuration. You cannot reallocate funds and not reallocate funds that require a two-thirds majority

of the notes to coalesce under a certain, you know, action. Okay. What's what happened in this case? So the admin key was used as a interim stop and then the protocol was upgraded to take the actions in reaction to a situation that was deemed to be bad by the protocol. Yep, by a two-thirds majority. Okay. So why couldn't you do that in this, in any case where, let's say, the majority of funds on a certain route are known to be directly stolen funds?

To do what do you mean? Exactly what you did for Thorpey, right? Where you pause, you take an interim action and then you whatever you want to do, right? So the action you were referring to is to be like turn off trading, for example, right? That would be an action, right? To be clear, that MQ we're talking about doesn't even exist in the code base today. It did a while back, it did no longer exist. It was removed, I don't know, a year ago, what if it was, a year and a half?

I don't remember how long ago it was. But even if it still was around, you want the protocol to turn off its entire system and all the trading that it does and the source of revenue and income for one to two weeks every time some external exchange or external thing gets hacked. That's what you're advocating for? I'm advocating for if that's the only functionality you have, right? And the vast majority of funds, so like, for example, the XRP to ETH route, right? We can look at the numbers, but it was not, it was not 20%, it was not 50%, it was nearly 100% of assets on that route for that period of time were directly stolen funds, right? If you had turned it off, I'm not saying a time limit, I'm saying any amount of time, right? That would have cheapsed them off somewhere else, right?

And then you wouldn't have laundered, stollary funds for DPRK. No, that's not correct. So what you would have to done is to turn off trading, right? And assuming that there's in-flight trades, those have to be reallocated. They have to go through restore migration requires a two-thirds majority of the notes, which would take on average one to two weeks for that to occur. And for those funds that have not been traded through the protocol, you could theoretically you could say, hey, I want to, let's go ahead and ban this eth address,

OX, blah, blah, whatever it is. But then the attacker would just change addresses to do, into any arbitrary address they want to, and then keep on trading. You can't have the fast enough response because the protocol is to centralize. If it was centralized, you're totally right. That's what NIR does. Nears decide to be centralized. That's the choice that they made for their protocol, which is, you know, their choice. That's fine. It's good to have a diversity of thought and opinions in the mainstream general, I'd say. But in our case, we optimize for decentralization from day one. It's never been owned or operated by me or JP or anybody else. It's always been done

by a myriad of people across the entire planet. And this protocol has a higher Nakamato coefficient than most other chains, including Bitcoin and the Ethereum might not you. So the do, which you're asking for, is not actually cracked to the due in the time frame that you have to respond to these things unless you want to say,

let's allow stolen funds to come in a Thor chain. Let's go ahead and pause all functionality of the entire protocol for two weeks so that we can reallocate funds and send it back to the protocol. Now, you can do that, two on Bitcoin. You could do that too on Ethereum. You said that North Korea loves Thorchain. They love Bitcoin a heck a lot more. That's why they're going through Thorchains to get to Bitcoin.

That's what they're trying to achieve, really. Right? So it's not practical in the case. So but Thorstein did pause for five weeks, not for anything related to North Korea, but basically for its own interest. And you know, you do. So I'm glad that we kind of sorted out what is possible and what is not. But I do want to point. I think that there are two functions that could have been used here. Halt-Eth trading and Halt-BTC trading. Those are two functions. The Halt-Eth trading function could have refunded ETH and XRP swaps from the Biket hack to the sender.

So I understand the cat-mouse point that you made earlier or the Wackamol point where they could have, you know, used new addresses. Like I saw this happen like for my book when I was covering the Dow hacker trying to cash out again to BTC. They were using ShapeShift, and it was totally that whack-a-mole thing where they even apparently had some kind of automated thing you could kind of see from the way the transactions were they probably

created some bot to do that. But the fact that Shapeshift also was responding, it did mean that it was difficult for this person and they kind of gave up at certain points. So, you know, it's not like it's impossible. And, you know,

that expression is not to centralized at all, right? Especially at the time of the Dow. Now it is, now it's become, now it's a doubt today. Well, but also, but it's like that expression, don't let the perfect be the enemy of the good. Like you're saying like, oh, if we can't block all of it, might as well just like, let let them run wild on our chain. Yeah. Well, so, I mean, it's just moral justification, right? Because the reality is that you could do things to make their lives harder. These people are harmful, right? Regardless of whether you want to have a debate about whether North Korea is bad or good, At the end of the day, these are people that rob this ecosystem,

people in this ecosystem. Yep. Right. You agree in the case when it was impacting the Thorchene Protocol that that was bad. No, that's, that's, to turn the whole talk. That is a very different thing. For five weeks. Let me, let me explain.

Why is it, why is it different when it's, let me, like you guys are part of the crypto ecosystem, right? So when people steal from each other in society, right, especially in crypto, that does impact you. It has an impact on you guys because you're part of this ecosystem. Okay. Let me. Can I answer your question?

Okay. Yeah. So as an individual validator, and this is not just true for ThorchChain, this is true for any protocol in the world, whether Bitcoin or anything else. Individual validators or individual miners have the requirement of ensuring their own protocol is safe, right? We've seen times in Bitcoin's history and Ethereum's history where we roll private releases of Bitcoin or private releases of Ethereum because there was some exploit or

whatever. With consensus, you can change anything you want to about any protocol in the world and that includes Bitcoin and Ethereum, right? You could increase the 21 million cap to be 42, which is what I was originally tended to be, but Satoshi made a mistake apparently. But you could do that with consensus, right? So the chance of where if Thorchain's got a bug that can give out of their bad user experience or funds could be stolen, as a validator of that protocol, your job and what you're being compensated for

is to make sure your own protocol is safe. And so with consensus, you can do that. Now, when there's a bug or an exploit on Thorchene, there is a wide consensus immediately amongst all validators that we need to, you know, pause trading or whatever you need to do in order to ensure that funds don't get stolen in the next block or in five minutes or whatever.

But they don't have a consensus the responsibility. Bitcoin miners don't have responsibility towards Thorchain people about, oh, it's a room that's stolen, swap it to Bitcoin,

and now, you know, are you going to put the same owners on Bitcoin miners that they have to do everything they have to do? I mean, nobody censors transactions.

Nobody censors UTXOs in the Bitcoin community, whether it be, you know, a foundry or whatever the other ones. But I don't see you complaining to them, but they usually shouldn't be mining

these blocks and having, putting in these UTXOs into a block, I don't see anybody else I mean, it's because of, you know, what I said earlier, that there's this perception that thrower chain

actually could probably act because it isn't as big and decentralized as Bitcoin or Ethereum. You know, one other function I wanted to call out was the make-pause function and that allows any single node to halt all the chains for 720 blocks, which is about an hour.

And, you know, you've had like multiple incidents where there were of these controversies about North Korea trying to launder funds through Thorchain. And during those times, like, different people in the Thor chain system just completely quit. Like, the chain decided, opted to help launder the funds. And you had developers literally publicly quitting. So we're at this point where now most of the people in the Thor chain system, like, I'm curious, like, you know, last week, did anybody try to use the make a pause function to say,

like, hey, let's take a pause, let's discuss what to do here. Or is it now just all people who are like, oh, we're going to make money, laundering money for DPRK, yay, you know. Nobody's yay in here. Let me get that clear. There's nobody yaying here. I take, I take, I take issue with that. Nobody. Because the Thorchene Twitter literally tweets, literally tweets.

Show me that. DPRK, known in DPRK transactions all the time. Show me that tweet, please. I beg it, please. For years now. Send it to me. Send it to me. Please send it.

Okay. I will send it to. Thank you. There's thousands of them. Nobody in our community cherishes or loves when funds are sold. That is completely ridiculous. I wish I could pull the quotes. I could pull the quotes of you talking about the X-M-R-R-in-A-Jur-

What Laura just brought up in the past. I'm going to try to find some of these tweets because I have seen in the past it's celebrating how much money it's made right after. We have a podcast every week. And every week, we talk about. We don't encourage theft. We don't enjoy it by any stuff. Chad, come on.

I watch a podcast. Every week, it would say that. What? In June, you were on a podcast where you literally said how excited you were for the X-MR integration because thieves are going to be going back and forth. And that is money. That's not what I meant. That's not what I meant.

Well, thank God someone to look at the fucking podcast. What I'm happy about is a preservation of privacy for individuals to be Yeah, I have to have a right for privacy. That I appreciate, and that's what I'm talking about. I don't want North Korea or whatever to be, that's just not my mentality, and it never has been. And if I misspoke, I apologize and I recant my statement. That's not how it is. But let me address what Laura brought up a minute ago, because about a year ago, there was a, I think it was by bit hack, right?

There was a $1.4 billion, I want to say, if my memory served me correctly. Yes. And there was definitely like a sticker shot to it, you know what I mean? So there are a handful of nodes, a handful of using devs that are like, I'm not sure about this. And there wasn't even an attempt to pause trading for Ethereum, but it lost, right? A few did it, the vast majority didn't want to do that, right? Just as it is in any other decentralized protocol, some people want to do it and some people don't, right? But the vast majority, by a two-thirds majority, so that's not what this protocol did.

It's holding the same standard that Satoshi put forward of permissionlessness. and censorship persistence, liberty, these kinds, like freedom isn't free. Like, this is like what we've been doing as an industry

for a so long of a time and to hold third chain any different than any other protocol, you're absolutely right. With consensus, you could change anything. But that's true with every protocol, whether it be Bitcoin, Ethereum,

Solana, you insert name here. With consensus, you can change anything and everything. But we don't ask other protocols to become more centralized to adhere to, some of your standards. We don't ask anybody

has to do that. Yeah, but, but you know, like I said in the beginning there is a perception that the Hortch chain is on the more centralized side, but what we're going to do is we're going to first take a quick work from the sponsors to make the show possible, and then we're going to discuss just how decentralized or centralized

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It's anonymous and it changes what we make next. Use the QR code on screen or go to unchained crypto.com slash survey. The link is in the show notes. Back to my conversation with Taylor and Chad. So there is an interpretation of Thornton. chain that it isn't decentralized or at least that it's not like Bitcoin and Ethereum because it is actually an intermediary. So basically the swaps go from the original asset to ruin first and then to the swap asset. So for instance, Sarshu of OKX tweeted, quote, the selected

validator set collectively controls the underlying assets in the TSS faults. Once the signing threshold is reached, I think it's like what is it? signature scheme. T something signature scheme. Anyway, once the signing threshold is reached, those validators can move the funds. So from a custody perspective, Thorchain is not comparable to Bitcoin or Ethereum basely or consensus. It effectively acts as an intermediary between users and the native chains. TSS distributes control among multiple parties, but distributing an intermediary does not eliminate the intermediary. So, Chad, what's your response to that? I'm sorry, who was saying that?

star shoe of okay x um i mean that's an interpretation i don't think i mean you could do uh like time locks and like atomic swaps on bitcoin and ethereum before if that's been true for many years now does that really change the equation of what we would allow bitcoin or or ethereum to do i don't think so i mean there's never been any advocation for that at least not that i've ever Well, so we'll discuss this more later on when we talk about regulation, but there are some regulations that look at whether or not any entity is taking custody. And there's these like money transmitter licenses that will that hinge on that question in particular. So I think that is why that question matters. But one other issue that I have seen people have with, you know, Thorchain and saying that it's not truly decentralized is, and Taylor kind of was talking about this last week on Unusing Money.

The signing library is closed source. So nobody can audit or reproduce what it is that nodes are running. So why is that closed source? So, okay, go ahead. So it's always been open source. It just was recently closed source because of an exploit that we had a few months. ago and the security team behind the forechain wanted to leave a closed source so they could do a deeper and deeper dive and have more time with the code base to make sure it's all good and secure before we reopen source it again. It'll reopen source again. I don't know if it's going to be like, you know, this week or, you know, the next release or whatever, just giving the security team the appropriate time they need to do the full deep dive to make sure things could before we reopen source it again. It's not a big thing.

So, yeah. So how are you guys doing distributions of the of the client's offer since it is closed? source now? Well, that part is most of the software is to open source. So Thor node, bifros, all those things. The TSS stuff is relatively a small bit of the code. That's all done through, like just Docker images, people pull through set up on their Kubernetes clusters and so forth and so on. But for right now, that is closed source until we can be absolutely sure that it's safe. All right. I did also want to ask about the nodes. So it seems today there's a little over 100 active nodes, but that there's only maybe about 50-ish-54 distinct operator addresses. And actually, when you dig into the details, it looks like there's four operators that are

running 39 of the nodes, and that's over the one-third threshold that can block signing or consensus. So given how small those numbers are, it seems like coordination would actually be incredibly easy. Yeah. So if you look up, like, using that definition, the knock on a motor coefficient, the one you just gave, that would give Thorchain a four, right? Bitcoin's a three, I think it was about a two, maybe a one, depending how you want to look at it. You could do that in theory, right?

If you get enough in the consensus, that is theoretically possible. But the members of this community, these validators, they're more aligned to Satoshi's original vision of decentralization, sense of resistance, and those kinds of things. Chad, do you think that the reason why the number of node operators

has decreased significantly over the last couple years is because perhaps the node operators were a bit scared of what you guys would do if they did take action? Yeah. So as I was saying before, we did the break. We didn't get to finish the line. But when we had the buy bit situation, right?

And that was 1.4. And I forget how much of that funds came through throat chain. But there were some balloters, just because I think because the sticker shock. There was nothing different about that. versus other ones, other ones, then the number being larger. And there was a bunch of validators who said, like, I don't know about this, right? This whole essentialization, oh, luck.

And some of them tried to pause the Ethereum trading, and the other ones voted against them. They lost by a overwhelming majority. And those validators left. We actually have losing maybe like 20 validators or something like that number. I don't remember the exact number to top of my head. And we lost a good chunk of our validators and our operators at that time. Since then, we've actually seen a lot of new operators come in, a lot more. We actually have more operators today that I think we've ever had in our history.

We have more validators today that we've ever had in our history. I think there's been a growth since then over the last, you know, year or so. To my knowledge, I don't think we've ever had, or at least very close to, more operators and more validators today than ever. I think we have 115 validators if you include the standby ones who want to turn into the protocol. And what do you, why do you, like, I agree with you that a significant number of nodes left after by bit. I also agree that

I mean it's up for debate like the back and the fourth during by bit right because people did try to turn off and back on. I've heard from node operators that left during that time that they were worried not just about like the social consequences

of going against the crowd because there were people that were doing it publicly right? Social consequences? What do you mean by that? Yeah. Well you know. I don't know. That's why I'm asking. So it turns out that if you say anything bad about

14, you get fucking attacked. Right. And I've been called every name under the sun since day one. Okay. You are so inflammatory. Come on, Taylor. You are so inflammatory. Chad, there's a big difference between taking an issue

with my ideas and calling me. What if you said about me? Taylor, come on. This is a, this door's been. both ways. Come on. Don't play that. Don't play that. Come on. You've called JPF.

On this podcast, Chris, like, I'll pay that, you know. Come on now. Like, come on. You are one of the most inflammatory people we've seen on Twitter in our Thorchain history. I mean, I should show you my notifications. Like, I mean, the misogyny coming out of the Thornton discord is one. It's absolutely insane. There's misogyny across this entire industry, which is horrible and should not be the case.

Twitter. I fought Twitter for years, Chad. Okay. I will say without like, it's so far, the link Marines in 2018 were bad, but they were not misogynistic like Thorntors. Okay. And that's it. You want to see my notifications. I'll show that. No, no. Let me just say this. That's a fact. Let me just say this. Like, if you want to take an issue with my ideas, then do it. Okay. But don't, but don't like. Can I, can I respond please?

if that is the case and people are saying things to you and being misogynist or whatever I would apologize on behalf of the fortune community that shouldn't be the case no one should treat you differently because you're a woman

no one should treat you differently because you have a difference of our ideas if somebody coming at you you've never seen me come at you with any kind of like this I know that for fact because I've always treated

with the utmost respect and I invited you to do Twitter space with me so we can have an actual productive substantive conversation for the first time in our history because you'd never wanted to talk to me

But that is the case, I want to pre-apologize or post-apologize, but the rare thing is, I would advocate any Thorchaz listeners right now to not be grotesque or anything towards Taylor or anybody else who is a difference of opinion. That is not the correct way to handle things, but it is a community, and there are anons, and this is crypto, there's fuck tons of misogyny and nonsense in this industry. We all know this. And it's not right, and I apologize if that's the case. Okay. My point with this, hold on, my point with this was not to play like, oh, pity Taylor. Like, no, that's not my point. My point is that that is a social repercussion, right?

And there are a lot of people who don't say anything about Thornton anymore because they don't want the little green circle bros to be showing up and attacking them constantly. But I also think for node operators, I think there's financial repercussions, right? because the perception, at least, by some of them, is that their room stake, whatever you call it, can be taken by the protocol. And if they go against the crowd. That's, so there is a methodology, well, we call it a ban, right?

This is when you get a two-thirds majority of nodes voting against an individual node and say, we're banning you and we're yanking your bond, right? We only use that once in our history, which is one, the attacker, and was very clear and obvious mathematically proven the attacker attacked Thorchain and stole $10 million. It's never been used or even threatened any time before that. So if you do have a validator saying that, I guess technically on paper that's true,

but there's no way, shape, or form that would ever really happen in reality. I would publicly, if that started people voting in that kind of way, I would publicly come out and say, what the fuck are you guys doing? This is crazy. You cannot ban people because of a difference of opinion. That's a ridiculous idea. I'll be on your side 100% Taylor. Okay.

So I'm just letting you know that the after and post by it, like, so like March, say March, April, May. Nobody was having conversations about taking anybody's room in that whole thing. I don't know who these people are talking to or what their feelings are coming from. But that was never even an option on the table to take any ruin from anybody. Well, I mean, but it so I actually, I agree with your statement saying like that was never a discussion, right? Because I never seen it either. I'd heard this, though, from Barry's node operators who choose to let to leave, right? And I've never heard anybody say that to me at any point in our seven-year history.

But I was at the time, at the time, I was like, I don't think that's like, you know, it wasn't until May of this year where you guys did then just yonk the node operator's entire stake. Because that individual stole 10 million from the protocol. That's the reason why. Right. But you did do that. It's just, it caught me off guard because it changed my perception of the node operator's perception, right? Node operators had told me this thing.

I'd never seen it before. And then a year later, you guys actually did it. And I was like, oh, yeah, you would never, maybe you would never get a two-thirds consensus to yank somebody's funds because they have a difference of opinion. That's absurd. Well, I mean, so what happened, you know, after by bit was people voluntarily just left. Yeah. So, so who knows if it had choice. They could leave.

Right, right, right. But like did, did they make that choice because they were worried that they knew that they were in the minority and they knew that two-thirds of the operators could vote to yank all their funds? And so it was sort of a position of like. Again, like nobody's talking about that. Nobody wants that. Nobody aback. Nobody's closing. He had private conversations where people cited that as a reason. Maybe Taylor did or did. I don't, I'm not sure who you spoke to. I'm just saying all I can say from my own perspective, who's been involved in this protocol from. from the very beginning, nobody has ever even floated the idea or notion of yinking anybody's funds, but the exception of that one case, well, that person stole money and we wanted to recruit some of the funds. That's never been the case.

It's never been discussed. It's never been floated. It's never been anything. This is the first time I've ever heard of this right now. Yeah, you can be correct and we can also be correct. The two things are not mutually exclusive. You know, it could be, yeah. It also can mean that, like, what I'm saying is that any fears that people had of

is unfounded because there's nobody who's talking about wanting to do this at all. So what was your perception of why so many node operators left after by bit? I think, like I said, I think it was just a sticker shock. I think it was a big number. People got a little bit nervous because it's a much bigger number than the usual, you know, whatever the number typically is. And people got a sticker shock by it. Yeah, but if they realized that they were in the one-third minority,

then they would know that trying to fight to have the protocol try to fight back and not launder the funds for deep. PRK, then they would know that they ran the risk of being slashed, like, entirely. So, you know, I, so. That's not true. So it, that's not true. If you wanted to, you could, as an individual node operator, you could say, like, I'm just not going to observe these transactions because I don't like in certain name here, right? They could do that. They would get slashed like a couple points, which is like, I don't know how much of that in dollar terms. It's, like, less than a dollar, right? They're not going to get their entire, like, even slash points you accrue

as an active validator doesn't go against your bond. This goes against your reward. You would still get back. The most you could do to damage to yourself is to just like remove all your reward but like keep your principle. Like that's just not the case. So why wouldn't.

So in my opinion, and maybe disagree, but in my opinion, like the fact that this is a thing that was perceived, I subnote operators last year. And then now I think it's become much more real because you guys actually did that for the,

the, 14 Hacker, right? Like in May, June, whatever, this year. It feels like that's very, like, coercive, right? You're going to keep like, and it's not, it's, it is, right? It's kind of like this low-key, coercive thing. Because you, because if I'm going to go, if I'm going to, so, okay, so in my opinion, the, the notion of like a decentralized protocol, right, is that every single person, right, is going to sit and they're all going to work with the incentives that they have to build and, like, improve and operate this decentralized protocol in the way that they want. Okay.

If there's rules that were written in 2019 or whatever for better and for worse that are coercive, meaning that there are node operators that want to have a certain say and are trying to, are trying to say that, right? They're trying to say, I think the best version of this protocol is out. if they are financially punished for that. Again, this is not a thing. You're talking about some theoretical situation that nobody's ever talked before

until you brought up to me 20 minutes ago. It's never been a conversation. But she didn't originate it. She is saying that she heard this from somebody who had the thought was a note operator. I haven't spoken to the person. She could be originating from her herself. I don't know.

She's such a chronic tort she for years. I don't know Taylor at all, to be honest with you. And I've never had anybody, and I can talk to the rest of the community about this. I mean, anybody's ever said anything like this. I will try to have the node operators that I'm in contact for the previous node operators that I'm in contact. I will try to have them talk to you.

Please. Or go public with this, okay? Because as far as I know, they have not. But I'm not going to run them. However, but I think it's more real. You disagree with things all the time, right? And on everything that's contentious, there's always disagreement and there's never been anybody ever talked about or interested in

just because this no degree doesn't agree the rest of people we should go ahead and and slash them or whatever that's just never been the case at any point in time ever i've never seen any conversation on that i mean but this is like a general problem with like consensus decision making right is that it does get very coercive because your option is to fucking piece the fuck out or get on board right you don't actually get to vote and like say like i disagree And then everyone goes, okay, we respect the fact that you disagree, but we're going to continue on, right? Yeah, that could mean, that happened with Bitcoin in like 2010, 2011. Right.

With the overflow thing, and they had 104 billion tokens and one address. Yeah. And they all came together through a private IRC, I think it was, and made a change. And they could have yanked anybody's coins from them in that situation. Okay, okay. Let's move on to more of these questions about how decentralized Thor chain is. So I think there's only three core devs. Is that correct?

Is there even three? No, it's one, two, three, four. I would say like five or six plus the greater ecosystem. Okay, okay. In July, one of the new core devs, A-lux or A-Lux or something, said that there are only three people. Oh, they said there are only three people to review code. I also want to ask. agree at that, but whatever. I think he's a little bit wrong about that. You can actually go to

our photo repo and see how many people are allowed to approve code change. I think it's like seven or eight or something. I'm not sure it's not going to have. Okay. And I also wanted to ask, so the documents say that per chain halts need a super majority. The code says that three votes are needed. So which one is it? So we have two different things around the way. We have what's called an operational limineer and economic limer. Operational one mirrors require like three nodes or greater to make to make a configuration change. And then four nodes can say, oh, I want to revert it back to this. And then five nodes can revert it back or six notes and whether it are in a direction. Economic menus require a two-thirds majority. Those are things that are probably

more at more risk at them or they work more controversial with this figure or those numbers should be for the configuration. Most mimears are operational for the most part just because of being able to quickly respond to any open exploits on the protocol itself. Okay. And then I also wanted to ask, so the front end swap.thorchain.org actually decided to screen the Bicket hackers' addresses from the Bickett API. So what's the difference between screening there and then screening in the node code that, you know, the two-thirds of operators could adopt? You're talking about the swapping interface? Is you talking about? Swap.thorchain.org.

Yeah. So the swapping interface, like pretty much every influence interface in the world, that is a centralized interface. And it does abide by, that's my knowledge, at least, all the laws and so on. That is not decentralized, not supposed to be decentralized. If you one day we'll figure out a way to make a decision, that would be better, to be honest with you. But right now, just like every other interface, it's not decentralized. The protocol itself is. And so the UI is controlled by the treasury.

It's not controlled by the protocol. It's not pretending to be a decentralized entity because it's not. Okay. And then I wanted to ask about a plug point. host that you wrote, where you said, quote, a chain may claim to have hundreds of validators, but that number means very little if most of them are operated by the same entities, hosted in the same data centers, or selected through a closed process. But 14 itself has less than hundreds.

And as we mentioned earlier, there are just four operator addresses that control 39 nodes. So do you think that 4-chain passes your own litmus test? Yeah, I think when it comes to evaluating how decentralized a protocol is, number of validators is not a good way to do it. And I'm not citing 14th essential because there's 115-ish validators. I'm saying it's essentialized because it has 50, 60, whatever the number is, individual operators across the world, which is better than Bitcoin, right? Bitcoin's got three, like, mining pools together would be 51% of the computing.

That's the same thing for Ethereum. You get like, but three or four operators of a minor validators of Ethereum, and you would have the same situation. And most of those are, by the way, like, corporate entities, like, Coinbase and Binance of these kinds of things. But, like, in that sense, then Thorchane is more decentralized than Bitcoin than it is than Ethereum, by the definition that you're granted can be in this moment. Wait, the one from your own blog post?

Yeah. So if you look at Docomotus, meaning that the, the, ability to make like to stop the production of blocks you would need a one third plus one doing something different if you if you if you categorize it as like a two-thirds majority to control of blockchain rather than stopping but even if you take the lesser of the two and you do like a you know a one-third plus one you can get four operators to you know stop the entire protocol I don't know why they would do that because you'd be burning your own room to zero which is not really in their financial interest to do so but theoretically on paper they could do that but then again there's only like

three entities you would need for bitcoin and like one or two or whatever the number is for for Ethereum. That's just like that is the world, right? You look like you're having thoughts about what he's saying here. What I got wrong to? I mean, I think there is, I mean, it's back to my point earlier. I think that there is this like very coercive undercurrent because the reality is like if someone were to try to do something on Bitcoin or Ethereum to die.

This is incredible. Like say, well, you're like making up a threat that no one's, I've never heard. And then all of a sudden, it's the trucks of your entire. Yeah, that was done by a two-third majority. Okay. Right. But that's what. Consensus.

Nobody's ever criticized another validator for having a different opinion. That is a laid up thing. That's never existed. And ever, you're making up this thing and it is never existed. She didn't make it. Chad, did you talk to the nodes that exited after Bibit? Did you understand our concerns? I don't start to talk to the notes.

I don't try to talk to them. Okay. Okay, so then don't accuse me of lying. I am accusing me to lie because it's never been talked about by anybody by any stretch. You've never talked to them. And the allegation that somebody would think that way is contrived out of nothingness. It's not crazy, actually. It's quite logical, actually.

I'm agreeing with you that it is a thing that could happen on paper theoretically. Sure, it's possible. I'm saying that's not anything that anybody has ever entertained at any point in time. Until the hacker, until it happened with the hacker. Until you literally just do that. No, that's not what I'm talking about. I'm saying to withdraw somebody's funds because you just don't like their opinion is not a thing. It has never existed.

Nobody's ever talked about it. And if it did. I mean, it makes complete sense to me. If I were one of those people who knew that I was in the minority on this position, I would know that the two-thirds majority would have the power to completely strip me. And it's just a logical conclusion. And yet it didn't happen, did it? Well, she's saying.

Because they laugh. Because they laughed. Exactly. So us too much. We saw their money. You can't leave quietly. You would know you have the broadcast publicly that you want to leave. And you would know for days in advance.

And you could do it if you really were so inclined, but nobody cared to do it at all. Okay. So you're Chad. The reason this discussion came up and the reason that I was having this discussion with them is because I asked them why they weren't more vocal and why they weren't standing up if they disagreed with the direction that fortune was going in. And this was the answer. Okay. If they have an individual opinion that they can have their individual opinion, I'm only saying that there's no interest or appetite in this, in this community to rug anybody's

funds. I mean, you can say that, but the fact is that it's possible that that could happen. Yeah. And that's what is interesting. And you did it afterwards. I'm agreeing. Which makes it more real. I'm agreeing that's my point.

Right? I can bring it up at the time, Chad, because I didn't actually think that you guys would do that. But then you did it. If it makes you happy, I can bring it for community and we can have a vote on we want to remove this capability just for this purpose, just to entertain what it is what you're talking about. I think it would be very interesting if you actually sort of lived by that like permissionless censorship, neutral ethos that you guys purport to have.

What do you mean? How have I not done that? In what way have I not done that? Please tell me. Because people are literally leaving the protocol out of fear that the protocol might punish them both socially and financially. Okay. Again, I have never heard anybody talk about this. This is not a sustained issue by any stretch of the imagination. We've made these points multiple times. So I'm going to move us on to a new point.

She said that whatever I would do. And I said, let me know what have I done to make this thing to not uphold the standards that we've been holding from day one. Let me know. And what you came up with is some situation where you talked to some person at some point in time to a way I was worried about a scenario that nobody ever threatened or talked about that is completely baseless to be. you're not actually standing on any merit here in your argument you're just saying i think that people might be scared because i had a conversation with a god it's not it's not i know but i'm just saying that nobody is concerned about of a previous node operator who disagree over the years and nobody's ever been seeking the even threatening the idea of it i'm just saying that anybody who has the mentality yeah yeah but it's a very logical like this person reached a very logical conclusion Let's do this.

Okay. Go ahead. There were nodes. There were nodes that tried to dissent during Bipit, correct? Okay. And then they stopped dissenting. Did anyone ever fucking question why they stopped dissenting suddenly? No, they voted to stop the trading.

The vote didn't pass. And then they left. Okay. And nobody, nobody was like, I wonder why they fucking left. No, it was clearly. I wonder why they stopped voting against this. It was clear. Nobody ever asked this.

No, no. It was very clear why they chose the lid because they didn't get on board the idea of door chain being properly decentralized. They wanted, they didn't want to be hit up by regulators or whatever the thing might be. It wasn't because they felt threatened that the protocol was going to rank, yank their funds. That's never been said to me or anybody to me. Yeah, it hasn't been said to you, but it was said to Tay. Okay, we're going to move on. But I'm more in touch with what this community than Tay is.

Is that fair to say? I mean, I'm engaged with the community. interviewed the former node operators who stepped down and you didn't. Okay. Well, I'm glad that because one operator have a... How many nodes do you operate? I operate no nodes. Okay, so let's say, well, I mean, with the hacker, I would say that you were one of the people that proposed riding the hacker, right?

So is that perhaps why the node operators didn't come to you and say, hey, I descend. Like, that they might know that you might be like, fuck you? I mean, take your entire block. You're talking about two different moments in time that are separate. by like 10 months or whatever the number is. They're not related, right? But you're conflating the two for some reason. But sorry.

My point is this. You have, you do have undue influence over the direction of the right. No, I have my voice and I have my opinion. And the others can choose to agree with me on my voice or my opinion and they can choose to not agree. And sometimes I do agree and sometimes I don't agree. It just depends on the situation. Okay. Okay.

Okay. We're moving on. We're moving on. So today, Zach XVT released an investigation in which he went undercover and exposed a Chinese crime syndicate that laundered the $1.5 billion in by-bit funds. And in his conversation with this guy, Jimmy, at some point, Jimmy suggests to Zach that Zach can also get into the money laundering business. And he messages Zach and he says, quote, I think you can do it too. All you need is Thor cross-chain. So how do you feel about that?

that this Chinese crime syndicate is recommending that he use Thorchene to get into the business of money laundering. Well, getting in the business of mine, so Thorchene is not a money laundering service, right? There's no obfuscation of information whatsoever. When you trade from Ethereum to Bitcoin, it is in clear text to everybody in real time of where that money is going from and where it's going to. Thorchain is not an odd. doesn't do mixing of any kind. So I don't think it would be fair to call 13 that makes that make so sense.

You can make the same argument about like, oh, you should become a Bitcoin miner because you're, you could make the same argument in any decentralized protocol. What's the difference? So you, so you don't have,

you just feel like it's, I mean, I'll also say the reason that we met Jimmy was because of the four chain discord. I don't know. Is that an inside joke or what's, what was it? No. Literally the money longers are in thwarting. Yeah.

And I'm sure the people on like Silk Road were in the IRCs of like or the Bitcoin forum, right? Like that's not indicative of anything of other than just a diverse community around it. Right? Mm-hmm. Do you think that there's nobody that is sithing, you know, illegal funds through wasabi wallet on Bitcoin or any other thing? I mean, you want to talk about what's sobby. That's shit's the most. I mean, the most centralized of this.

I don't know. Like, is there... It's absurd. If you want to talk about old Lazabi, that's totally different than what's hobby today. Let me ask you this question. Let's ask me this question. Let me ask this question. Let me ask this question.

Should a Bitcoin miner not mine transactions that are questionable UTXOs? I mean, I think this is just, it's a complete false economy because... No, no, no. It's not... Talk about that dichotomy. I'm just trying to understand what your worldview is on dissentization. Should that be the case? Okay.

So, no, my... I don't fucking personally, like the whole decentralization permissionless will, like, these are all words and they've lost all meaning. So I prefer to avoid them. Okay, but can you answer the question there or no? We live in a society. I don't know. I can't answer.

This is your answer, okay? We live in a society. Okay. I don't make excuses for my behavior. I don't like people who make excuses for their behavior based on words that have no meaning. So I think that if you want to live in society, meaning that like we have pro-social things where we help. each other where we try to create value in this world, right?

Then those are choices that every single individual, every single group, every single entity makes. And ideally everyone is making ones that sort of benefit, uh, themselves, their communities, society, the world, etc. I think that when people support and help thieves, that's bad because it hurts people and it incentivizes harm and anything that's bad for society and it's bad for the world. Okay. Right. So when I see Thorchane, like my biggest issue with Thorstein, right, is you guys celebrate. You financially benefit. Okay. In my opinion, and you can disagree with me. Okay. There's a lot of coercive shit that happens. Okay. I think it would be better if Thorstein tried to stop the bad activity that impacts this ecosystem, specifically direct thefts. If we just did that, I think the world would be better. And that's the issue that I had because Thorstein people come at.

me and say, no, you're wrong. And I... So is that the answer to my question or no? I don't think he answered it on that whole thing you just said there. Should Bitcoin miners not mine UTXOs that were swapped through Thorchain via, you know, North Korea? Should miners on... I mean, that's a completely different question, okay, because...

But I'm asking you to answer it and you're refusing to answer. I don't know what you... I mean, this goes back... This goes back to what you said before. Like you, on Twitter, you said Thorstein can't. Not that it. Yeah. It's impractical for the chain to block individual transactions.

So Bitcoin definitely falls in that camp. But I think the reason why there's fighting on the timeline is because there's a perception that Thorstein can, but it's just not doing it. Right. So I feel like your question is creating some kind of false equivalence between. Bitcoin and Thor Chain, which nobody outside of Thor Chain stands use them as being the same. You're right. By the way, but Chad,

by the way, like, at no point have I ever said, at no point have I ever said, just shut down all of Thorchain, okay? I've also not said, like, go arrest all the developers of Thorchain. Didn't you have the case that earlier this episode where you said that we should shut down trading? When a specific route is over

90% directly stolen funds, then we should shut down. Do anything. Yeah, then we should shut down. anything. Make your decision. It's your protocol. It's your future. This is your shit, bro. Do something. This is not my protocol. I don't own an rubber right. Let's get that clear. Okay, then how about make a

recommendation? My recommendation is that I believe in Satoshi's original vision of decentralization. Because you have to remember that when Bitcoin first came out in 2009, it was the most beautiful thing. For the first time, I mean, I think everybody in crypto believes in that vision. The question is whether or not Except for her because she's saying She wants to know.

She explicitly said it on this podcast Not two minutes ago saying that everybody should do whatever they can To stop illicit funds. Even that means if they have that possibility. We don't. And I've explained to you why that is. It's not practical deposit. Like if people stole money from the Thorchain

And I have some vague memory that's actually happening, they could swap stolen Thorchane funds through Thorchane and we wouldn't stop it. We wouldn't have an ability to stop it. That could also happen. I'm just telling you that in order to... I'm sorry. If repeat that, I thought you,

because you already did punish somebody who stole money from your... If the people who stole funds from the protocol tried to swap those funds back to the protocol, that would not, we wouldn't have an ability to stop that either. I'm telling you that in order to achieve the goal that you're advocating that I do, which is to stop illicit funds,

we have to fundamentally change the decentralization of fortune to become more centralized. We can create a private key and give it to me and then I'll be the orator of what happens. It doesn't happen on the portal. Not even. I mean, we discussed the various mechanisms that could have been used, right? You, I mean, it's

like, yeah, so maybe you can't block like specific addresses, but you do have halt ETH trading, you have halt BTC trade. Like, there are functions, you have the make-cause function. There's other functions that you could implement, you could implement, that are

that are as or even more decentralized, right, that actually add more checks and balances. I would love to hear this. Tell me how we can change the protocol become more decentralized, but then stop illicit funds. Go ahead. I'm just saying in the exact same way that you guys already do,

but the difference is that you, right now, you have this mechanism by which you can, no, because. This is just, you're deaduous at this point. You're making statements. I'm asking you to explain your statements and you're reading like,

I'm saying, I'm saying as centralized as possible, right? Like, as it is right now. Okay? Yeah. Like, but the problem is that you guys keep kicking everyone out who dissents. No, no, no. No one got kicked out because they dissent.

People have kicked left on their own volition. That's a very different thing to be, to be fair. You're being disingenuous in your statements, obviously. We can't be, in order to do what you're asking for, we have to change the design to become more centralized. And something tells me that this community would not want to get a two-th majority acceptance to be to create some sort of admin key that I control like they do over in near I'm not asking for admi key Todd I'm asking like in the same way you guys suddenly were

able to make decisions regarding Thorfai in the same way that you were suddenly able to make decisions regarding your own hack you could suddenly make decisions in like exactly same what you currently do let me agree with you let me agree with you yes if you get consensus behind any change you could change anything right that's true with every protocol no matter how centralized or centralized it is. With consensus, you could change anything you want. Right. And so you choose not to when it comes to directly stolen nuts.

So does Ethereum. They could choose to do it if they wanted to. Okay. I don't, yeah, I don't like, let's start from the premise that you guys are not Bitcoin or Ethereum, which is, I think, kind of the general view of Thornton. You're rolling your eye. I do want to ask, we're running out of time. So I do want to, I really have to ask you this other.

question. Go ahead. So I'm sure you're aware that the U.S. is pursuing its case against Roman Storm of Tornado Cash, and they're still doing that despite, obviously, the big change that we've seen from the Trump administration and the government's attitude toward crypto. So, you know, kind of analyzing or comparing Thorchain to Tornado Cash, there are certain respects in which Thorcane has kind of like a worse case than tornado cash. So first of all, the outbounds from the swaps require an affirmative signature from bonded identifiable operators

who jointly custody the vaults. I mean, they're anonymous individuals. I don't know who they are. Okay, well, there was another case involving Preston Van Loon that said that truly immutable smart contracts are not property, so they can't be sanctioned. But obviously, since, you know,

what you guys are doing here where it's this joint custody of the vaults, that's a different setup. There was another custody and control test that the acting assistant attorney general Matthew R. Galliotti, hopefully I'm saying that correctly, gave in a speech in 2025 and which he said, quote, where the evidence shows that software is truly decentralized and solely automates peer to peer transactions and where a third party does not have custody and control over user assets, then this 1960 B1C charges would not apply. So those rules that I just mentioned, those are about operating an unlicensed money transmitting business while knowingly transmitting funds from criminal activity. So it's kind of what I mentioned earlier about the money transmitter stuff. And then the last thing is that there's some guidance on this about how the law would apply in, sorry. So these are some ways in which it looks like the law would apply to Thorchain.

and that Thornton would not pass the test. So how do you defend against, you know, the way I'm interpreting these regulations? Yeah, I mean, Roman Storm was behind a mixer, which is fundamentally very different than the decks, right? Like, withhold, like creating, you know, encryption around transactions, so forth and so on is wholly different than what Thornton does. I would also say that, like, I've had conversations with attorneys about this topic.

None of them are very concerned about it. I've had conversations with three-letter government agencies in the United States years ago. They weren't really interested back then either. Oh, and was that like they reached out to you or did you reach out to them? No, they reached out to me. Was it the FBI or which three-letter agency? I'm not going to get into specifics of it because I don't think it's probably right to do so. Was it like on the like justice side or like, you know, financial regulation side?

Like I said, I'm not going to get into specifics about it. I'm just going to say that like I've had. had conversations with government entities around this topic. There wasn't any appetite back then. This was back in like 22 or 23. There wasn't much appetite. Even like the conversations we had there was not adversarial, right? It wasn't like, you know, we're investigating you, blah, blah, blah, it was more like we want to understand more deeply how fort chain works. We went through a process to educate the government about how four chain functions, booting the admin near and all these other things and knows,

and da-da-da-da-da. And, you know, there wasn't much interested at the end of the conversation. So even though there is this custody aspect to the vaults, and that is one of this custody and control aspect that's mentioned in this test, you think that Thorchina is in the clear? Yeah, everything that I, like, I'm not an attorney, so maybe my opinion matters very little in this context. But all the conversations I had with attorneys and with the government and all these things have never insinuated at any point that there was anything wrong being done here. And I'd be surprised that anybody wanted to make that argument. but all the concerns that I've had with attorneys and governments and whatever has been a non-issue. Okay. And another question I just have to ask is about a hypothetical that they discussed on uneasy money, which is what if there were suddenly like a lot more node operators? And these were ones who actually wanted to try to block laundering on thronging.

Then what do you think would happen? Then laundering would be blocked. Like, anybody can become a validator. You don't have to go through me or any special process. All you have to do is buy a ruin and then spin up a node and churn in. And you have a voice, right, on this protocol. And if you get a two-thirds majority agreeing that we should censor transactions, then sure, that would be the way of the community.

Okay, okay. Interesting. I also wanted to ask, so TRM is now going around teleics, changes to screen Bitcoin coming out of 14 volts. Does that something that, is that like a fact that gives you pause or makes you worried about the government going after you? I didn't really know about that, but no, not really. I didn't know about that you're. Oh, okay.

It's a bit easier to me because like we've done like $125 billion in volume over the like several years. I'm only at 1% of that 2% of where the number is is actually like illicit funds. to mark all of our outbounds by by TR where the TRM where the thing you said is this seems a bit ridiculous to me but they can be there were certain there were certain funds that were being or there were certain risks scores that were being updated after by bit just because

the sheer volume that was coming out but it was again it's only on the routes right because the ultimate end goal for like transaction screening and and even for taking any action right blocking or seizing or doing anything ultimately like the goal is to only impact the actual like the stolen funds on the thieves and the money launderers who are knowingly doing it, not random bystanders, right? And there are times where thwart chain is 99.9% coming out of route during a specific time is 99% DPRK or their money launders. That's not always the case, though, right?

Like in between after, what was it, before by bit, there was like a six-month break where DPRKA just didn't, they hadn't hacked anything. So there weren't. But the second in the vibe it happened, it was, yeah, it was like $1.4 billion on the EFBTC route. So it wouldn't surprise me if that those were being, if the risk or the dust would be higher. Does that make sense?

Yes. Sorry. By the way, I overstated the TRM. It's that they're just like being recommended to, to, to for, especially for after the hacks. Okay. I did also want to ask. So I know you're not JP, who is one of the other co-founders that we mentioned earlier, but I do have to ask you.

So JP has an Aston Martin helicopter, and painted on the side are a bunch of flags, including the flag of North Korea. What do you think of that? I mean, I've seen JP's helicopter in person. It did not have any North Korean flags on it at least at that time. I don't know what that would be about. I mean, JP is an interesting character. He's got some character flaws in him, like we all do, I guess.

But I think the one thing we can say is that, like, what he's done for this industry, creating Thorchain and Voltusig and, like, other things, he's contributed a lot to this industry and created industry first and achievements. So I think despite what you might like about his personality or not, whatever, I think he deserves respect for his contributions to the space. Okay. All right.

Last couple of questions. So NIR Intense used its shield risk layer, which can refuse a quote or halt to swap mid-execution. With this feature, they blocked and attempted $50 million in laundered funds and froze half a million dollars mid-swap. They planned to return $340,000 of that. And they tweeted, permissionless doesn't mean neutral. Would Thorstein ever consider implementing something similar? Maybe if the nodes want to deploy something like that, let's look for validators to determine. I don't know a lot about Nears Shield systems, so I'd have to do some technical kind of research to understand the implications of it, the design, blah, blah, so on.

But if the nodes wanted to do that, they could. My guess is they wouldn't, but I don't speak for them. All right. Taylor, is there any last question you want to mention? I mean, I was just going to ask about, because a lot of people have asked about this, the profits and the incentives and how they come into play. And I mean, yeah, I just think that that's like a big conversation. And I like to hear Chad discuss that, right? The accusation, Chad, is that thorching profits directly and very heavily from the stolen funds.

And therefore, people are less likely to want to do anything about it because everyone's, you know, so much money. Yeah. In recent months, when you look at the fees on the protocol, there are two huge spikes, and one is after Kelpdow and the other is after BitGat. Yeah. It comes down to like same conversations you went before. Yeah, every protocol, you know, has fees that it generates from every transaction. We're talking about one protocol or another. And sometimes those fees are, you know, illicit. Like, Unuswap has made money off of, you know, North Korean trades as well, right? And so if anybody who contributes to that system, including the, what's at 8% they cut for themselves for the Unitokin or whatever that is, whatever. It just goes back to our original kind of stance of like, we just believe in centralization, permissionlessness.

This is what's important for humanity to move forward in our financial systems. I'm not sure. It's such a small percentage of the income that the protocol makes is through illicit funds. When you look over a long, like you look at a one day like Taylor simply, like to tweet about. oh, in the last 24 hours, all the funds are from this one trade. I mean, it was like $10 million in fees. I know, but if you look at over the time span of the entire protocol's history, it's barely a blip.

Okay, but let's just take the one day where it did generate or whatever, it was a week, okay? We're generated $10 million in fees for the various entities, right? There's a distribution, right? All those people directly. It didn't generate $10 million in fees. It generated $10 million in volume. The fees is probably $20, no, no.

It was $1.1. It was $1.1.3. million in volume over between a week and 10 million Vs. That's not a private. Chen Ellis is actually estimated it was $12 million generated in fees, and they said that was conservative. The Bickett thing? For Bid.

No, for Bid. That's Bid. Bidgat's going to be, Bickett's still going on. So I don't know what the number is, but it's going to be 350 times to whatever. But you've also, you've updated the fee distribution. So I'll do the map when it's, when it's ready. But regardless, we're talking about millions of dollars. Okay.

And it is over a short and up period of time, right? Where it is like literally the majority of the fees and the majority of the volume, it's, it's the vast majority. Like what do you say to someone or what would you say to me? Because like if I want to be a note operator, right? But I don't want to profit from North Korean laundering money via my, the service that I provide. That would be a concern for me. Yeah, you can do that. Regardless of the law, like just more than the point to do that.

If you wanted to take some of the returns you get from running a node and then send it to a in a transaction back to, you know, BitGed or whatever, go right ahead. Would you recommend that people do that if they're running nose? I think it's up to the individual to make their own choices. It's not to me. And then what about the distribution of fees that go back to the protocol itself or the dev fund or the, you know what I mean? It's like a waterfall, right? Yeah, the dev fund gets like a 5% of the, it's a very small sliver. Yeah, but I mean, it's still when we're talking about millions of dollars, five percent of the whatever.

I don't know what it is. I haven't looked in a little quite a while, actually, but what kind of money is coming into that to that fund? But it's very small. Do you think it would make a difference though? Like, if you. Yeah, maybe the Treasury will make a decision to like to take some percentage of the income and that the dev fund has received that it has actually has control over and send the money back to a bit get. Yeah. I mean, I think it would be a good.

I'll take that up with the treasury and have a conversation about that idea. Yeah. And it's not necessarily like the, I think there's like this, this idea that for like say buy a better bit, get, they lost so much money. And if you're only going to be able to return six figures of it, like who the fuck cares. And it does make a difference though because it shows that, you know, it shows that you give a shit and that you don't want to be profiting from these, from this activity. Right. I don't, to be fair, I don't profit at all from this activity. I don't need directly or maybe you don't need an interrupt to be honest to you.

All right. All right. Well, we had a really great debate. Chad, thank you for, you know, being in the hot seat. I'm sure it wasn't super funny.

You should have me again another time. Happy to come back. Okay, okay. Well, thanks so much to both of you to Taylor and to Chad. Nothing you hear on Unchained is investment advice. This show is for informational and

entertainment purposes only, and my guest and I may hold assets discussed on the show. For more disclosures, visit UnchainedCrypto.com.