KuCoin hack unpacked: More crypto possibly stolen than first feared

The KuCoin hack is the first high-profile case of a decentralized exchange being used to launder stolen funds.

Cybercriminals have continued to come up with new, innovative attack vectors that a lot of prominent crypto platforms are still falling prey to. For example, Johnny Lyu, the CEO of Singapore-based cryptocurrency exchange KuCoin, stated (https://www.kucoin.com/news/en-kucoin-ceo-livestream-recap-latest-updates-about-security-incident) on Sept. 26 that the exchange had been on the receiving end of a major hack (https://cointelegraph.com/news/bitcoin-price-unfazed-after-150m-hack-of-major-exchange-kucoin) that resulted in the firm’s Bitcoin (BTC (https://cointelegraph.com/bitcoin-price-index)), Ether (ETH (https://cointelegraph.com/ethereum-price-index)) and ERC-20 hot wallets being affected. Commenting on the hack, Charlie Cai, the media manager at KuCoin, told Cointelegraph:

“Following the incident, KuCoin is acting quickly and transparently to deal with it. We are trying our best to mitigate the impact of the incident by working with many blockchain projects, security firms and crypto exchanges.”

In all, it’s estimated that KuCoin lost upward of $200 million in customer funds (https://cointelegraph.com/news/freeze-pause-reboot-projects-react-differently-to-200m-kucoin-hack). However, despite the security breach, the price of most premier cryptos, as well as DeFi tokens, barely showcased any negative action despite the fact that major hacks, such as this one, have traditionally resulted in market-wide sell-offs.

On a more technical front, Cai highlighted that a total of 130 million of the stolen digital tokens had already been secured or in the process of being recovered by the KuCoin security team. In this regard, Cai further stated that Tether (USDT (https://cointelegraph.com/tether-price-index)) had successfully frozen a total of 22 million USDT stablecoins that were compromised while Velo Labs, too, announced that it will redeploy and replace each of the VELO tokens that were transferred as part of the heist. He added: “The 122 million VELO tokens (about $75.7 million) that were affected will be invalidated.”

Similarly, some of the other tokens that the company claims to have secured since the matter came to public notice include Silent Notary (SNTR), Covesting (COV), Orion Protocol (ORN), KardiaChain (KAI), NOIA Network (NOIA) and Opacity (OPQ).

Red flags addressed by KuCoin

Earlier this year in March, KuCoin was in the midst of a number of controversies. The crypto exchange was facing the possibility of a class-action lawsuit that claimed KuCoin (https://cointelegraph.com/news/singapore-court-locks-crypto-exchange-kucoin-s-web-domain) provided its customers with “false and/or misleading statements.” Similarly, as part of another suit (http://securities.stanford.edu/filings-documents/1073/K00_03/202043_f01c_20CV02806.pdf) — Chase Williams v. KuCoin — it was alleged that the exchange was dealing unlicensed securities, which is illegal (https://cointelegraph.com/news/godaddy-email-confirmed-new-details-on-kucoins-legal-troubles-in-singapore).

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