Bybit seeks return of fees from DeFi exchange ParaSwap after North Korea’s $1.4bn hack
DeFi’s fifth-biggest aggregator processed several large token swaps totalling $195 million, doubling its typical daily transaction volume and earning $100,000 in fees in the process
Last month, decentralized exchange aggregator ParaSwap received an unexpected windfall.
DeFi’s fifth-biggest aggregator processed several large token swaps totalling $195 million, doubling its typical daily transaction volume and earning $100,000 in fees in the process.
There was just one problem. The swaps were part of an effort by North Korean hackers to launder $1.4 billion of crypto stolen from Bybit.
Now, Bybit is asking ParaSwap DAO to return the $100,000 as part of its ongoing recovery efforts.
“While this was an automated process, it has inadvertently resulted in the DAO holding proceeds linked to a widely reported exploit,” Bybit said in its proposal posted on the ParaSwap governance forum. The forum is where ParaSwap’s decentralized autonomous organization, the digital collective that governs it, debates proposals and makes decisions.
Although the amount of money is small compared to the total amount stolen, how the situation plays out could have a big impact on the Paraswap DAO and the broader DeFi sector.
None of the five delegates DL News spoke to said they planned to vote for ParaSwap DAO to keep the funds. But many DAO members posting on the ParaSwap governance forum argue the DAO shouldn’t comply with Bybit’s request.
They say doing so will compromise the protocol’s commitment to decentralization.
“ParaSwap will damage its reputation if it agrees to return this fee to Bybit. The protocol has always been permissionless — there’s no in-between,” said one governance participant who goes by krinweb3.
ParaSwap’s dilemma is part of a larger set of issues surrounding the theft of $1.4 billion worth of crypto from Bybit by North Korean state-sponsored hackers the Lazarus Group.
In the days since, Lazarus used several DeFi protocols to launder the funds, forcing some to make changes to prevent Lazarus from using them that compromise their decentralization.
