RUNE sees major sell-offs after FBI’s demand to block Binance hacker transactions sparks debate
The FBI asked THORChain node operators to block transactions associated with the Binance attacker's addresses.
The Federal Bureau of Investigation is urging private entities, including the node operators of THORChain [RUNE], RPC node operators, instant exchanges, DeFi firms, and blockchain analytics firms, to “block transactions with or derived from addresses (of) TraderTraitor actors.”
The RUNE token has shed 17.7% of its value in the last 24 hours. Over the period, it has also seen a hike in short-selling, as evidenced by an uptick in Open Interest and a drop in funding rates.
How an unrelated THORChain halt hampered Binance’s hackers
On 31st October, THORChain announced that it was halting trading on several blockchains. An Ethereum one-block reorg caused THORChain to pay out 10 ETH that a vault never received.
A reorg happens when the network replaces a recent block with a competing block. Node operators halted all chains as a precaution so developers could investigate. This inadvertently delayed the North Korean hackers.
The FBI has explicitly asked THORChain to block addresses tied to the hack. The chain’s co-founder, Chad Barraford, wrote that “THORNode operators have zero information that isn’t already public and readily available in real time. No subpoenas required.”
Global Head of Business Development and Partnerships at Solv Protocol, Catherine Chan, disagreed with Barraford though.
THORChain co-founder’s argument: the BTC was provided by arbitrageurs, not THORChain. Arbitrageurs sourced it from CEXs, who did the KYC, so it’s the CEXs’ problem. But every BTC sent is signed from THORChain’s TSS vaults. Nodes hold the keys, earn fees, and can vote to halt the chain, i.e. it works like an exchange. Then revenue: 85% ($1.2B) of the Bybit hack was washed into BTC via THORChain. Nodes, LPs and front-ends collected $12M in fees from the Bybit hack. THORChain has to pick whether it is a protocol or an exchange.
Effect on RUNE’s bull trend
As observed previously, the Open Interest ticked higher while the funding rates fell alongside RUNE’s price. This hinted at bearish speculative activity.
The altcoin’s price also slipped below the $0.60-swing low set in late September that kept a bullish trend on the daily timeframe alive. The swift breach of this level signaled a shift in the trend, although the former supply zone at $0.50 has acted as demand in recent hours of trading.
A drop into the $0.41-$0.50 long-term demand zone can be expected next.
Final Summary
- The FBI asked THORChain node operators as well as other private entities to block transactions associated with the Binance attacker’s addresses.
- RUNE’s price reacted bearishly while THORChain’s co-founder wrote on social media that node operators uncomfortable with the pressure to block transactions are free to leave the network.
