Tag: Crypto stolen funds

$NEAR’s Bitget screening decision challenges crypto’s permissionless model

Shevchenko positioned the blocked $503,000 against $NEAR’s broader business activity. The network routinely processes more than $100 million in daily volume, making the intercepted funds a negligible fraction of its activity. The screening therefore did not materially disrupt the service’s flow.

Cross-chain infrastructure has traditionally been viewed as structurally incapable of stopping stolen assets because there is often no operator to contact and no account that can be frozen. The Bitget-related transfers demonstrate that the limitation can instead be a matter of policy. A service that takes custody during a swap, even temporarily, can screen funds at that point. Whether it does so is a business decision rather than an unavoidable technical limitation.

Permissionless infrastructure, but with boundaries

$NEAR presents itself as permissionless, open and uncensorable. However, a service capable of freezing funds during a swap is operating in a way many users would describe as permissioned. Vini Barbosa, a technical writer building at Ramp Labs, argued on X that permissionlessness should remain neutral. He also warned that a rail willing to restrict suspected unlawful users could restrict people moving money under repressive governments.

NEAR cofounder Illia Polosukhin responded with a narrower definition: permissionless means that no one needs permission to own assets, transfer them or deploy contracts. Shevchenko’s description acknowledges the tension between those positions. The service will remain “permissionless infrastructure, but with boundaries.”

Institutional users, which are now a major target for infrastructure providers, generally favor rails that include screening controls. THORChain publicly defended the opposite approach. “A halt is not a selective freeze of specific funds or an individual swap,” the protocol wrote on X. “THORChain is permissionless and doesn’t censor by design.”

THORChain also questioned what responsibility Bitcoin, Ethereum and BNB Chain should bear when stolen funds move across their networks. It pointed out that the addresses involved in the theft of $10.7 million from its own vaults in May were never blacklisted. The same position applied after the $1.5 billion Bybit theft last year.

Crypto industry divided over who should control stolen funds

Supporters of decentralization backed the decision, but prominent industry figures also criticized it. Bitget CEO Gracy Chen, whose request THORChain declined, wrote that decentralization “is a design principle, not a shield for facilitating known stolen funds.”

OKX founder Star Xu challenged the comparison with Bitcoin from another angle. THORChain’s validators jointly control the assets held in its vaults, he argued, making the network an intermediary rather than a base layer. Xu also noted that the same node operators halted THORChain for 39 days in May when its own vaults were threatened.

Stablecoin issuers represent a separate control layer. Circle and Tether froze approximately $320,000 in USDC and USDT connected to the Bitget breach. Although that amount is small compared with the total loss, it demonstrates why issuer-level freezing remains the most reliable circuit breaker in crypto: it acts directly on the asset rather than only at the application level.

Who controls the frozen $503,000?

$NEAR is holding the intercepted $503,000 while a legal and recovery process is pursued. The network has also waived the recovery bounty offered by Bitget. Formal requests are handled through a Kodex law-enforcement portal, which is the channel Bitget or investigators would use to claim the funds.

Shevchenko’s report does not identify who has authority to approve a release, nor does it describe a process through which a wrongly flagged user could recover funds. The screening system operates using estimates with a stated error margin of 10%.

A screening system that stops a legitimate transfer without publishing release authority or a remedy effectively holds someone’s money on suspicion. Securities and payments industries developed defined procedures for this situation because retaining funds without a clear process creates liability in almost every jurisdiction. Crypto’s screening infrastructure has reached a similar point, but without an equivalent framework.

Why This Matters

The dispute over the frozen $503,000 will test whether cross-chain services can impose screening rules while maintaining a credible permissionless identity. It also raises practical questions for institutional users, decentralized protocols and asset issuers about who should intervene when stolen funds move across networks.

The outcome could establish whether fund releases are governed by transparent rules that users can examine or by discretionary decisions made by infrastructure operators. It will also show whether crypto’s emerging compliance controls are accompanied by due-process mechanisms for users whose transfers are wrongly identified.

Frequently Asked Questions

Why did $NEAR freeze the $503,000?

$NEAR intercepted the funds in connection with the Bitget breach and is holding them pending a legal and recovery process. The source does not specify the final authority responsible for releasing the money.

What is the debate over permissionless infrastructure?

One side argues that permissionless networks should not censor or selectively halt transactions. The other argues that services handling assets during swaps can and should screen suspected stolen funds, particularly for institutional users.

Can a wrongly flagged user recover the frozen funds?

The source does not describe a published remedy or release process for wrongly flagged users. Formal requests are routed through a Kodex law-enforcement portal used by Bitget or investigators to claim the funds.