Following a request from Bybit to return funds that were received during the swaps of stolen ETH by the Lazarus Group, members of the ParaSwap DAO have split into two camps: Some support the return of commissions. Others oppose such an action.
On 4 March, a proposal to freeze and return 44,67 wrapped ethereum (wETH), the amount of which nearly reaches $100,000, was put forward on the ParaSwap DAO forum.
At first, such a proposal faced criticism, with several DAO members even calling for a review before making any decision.
The next day, 5 March, Bybit representatives posted a thread on their official X (Twitter) account, confirming that they were the ones who sent the offer to return the stolen funds.
DAO members then began discussing possible solutions, with many wondering about the future implications of a potential commission refund.
Onchain detective and DeFi expert Ignas, who is the DAO's ParaSwap delegate, wrote a thread on his official X (Twitter) account, emphasising the dilemma facing the community.
He also noted that taking profits from the hack puts DAO in a bad light and that returning them would create a more loyal community attitude, as well as show support for another industry player. Whereas keeping the funds could entail multiple regulatory scrutiny, headaches and criticism from the cryptocommunity.
Despite this, Ignace sees this as a dangerous distinction: "Code is law. DAO earned these commissions legitimately by providing smart contract services. In case the funds are recovered now, how to proceed in the future? This is a dangerous precedent for all of DeFi."
The ParaSwap DAO delegate also noted that such a development could also have implications for ThorSwap, which the hackers used to swap ETH into various assets.
Nearly a week after the hack, by 27 February, the total volume of swaps within THORChain exceeded $1 billion, as hackers used the site as a primary tool for laundering stolen funds. Andby 4 March, the platform had generated around $5 million in commissions, while the total reached $5.4 billion. If Bybit files a similar refund request from THORChain, the exchange could recover significantly more funds.
Members of the SEED Gov DAO shared three possible outcomes:
- Return of the full amount of funds requested.
- Complete refusal of the exchange's request.
- Arrangement for a structured return that will include retention of 10% of the funds as consideration.
Since the opinion of ParaSwap DAO members, a heated debate broke out on the forum. Some stated that the funds should be returned. Others said they could organise a structured return of the funds if they kept 10% as a consideration and ensured that any future liabilities for the DAO were eliminated.
Some strongly opposed, stating that if the ParaSwap DAO returned funds to Bybit, it would "damage its reputation".
One DAO member gave an example of a similar situation that happened back in 2013, a protocol asked ParaSwap to refund commissions after hackers used it to launder funds. He emphasised that the decision was made then not to return the funds, adding that "there is no reason to make a different decision this time".
