Due to crypto hacks that have occurred in the past few years, crypto exchange security has been a trending topic lately. Yet again, the topic was in the headlines after more than a hundred million were drained from one of the largest crypto trading sites, KuCoin. While rumors originally reported that hackers managed to get away with tokens worth $150 million, current figures placed the figure closer to $200 million.
KuCoin is among the largest cryptocurrency exchanges in the world. As of last Saturday, September 26, it’s has been tainted with the scene of the inevitable cryptocurrency theft. In a recent livestream in response to the incident, KuCoin Global CEO Johnny Lyu stated that the reason for the assets outflow is due to “leakage of the private key of KuCoin hot wallets.” Part of bitcoin, ERC-20, and other tokens in KuCoin’s hot wallets was transferred out of the exchange, which contained few parts of their total asset holdings.
More About The Incident
KuCoin was genuinely open about the breach, describing its response from how the platform undertakes serious measures and how it has been in touch with its industry partners. “We are in contact with many major crypto exchanges such as Huobi, Binance, OKEx, BitMax, and Bybit, as well as blockchain projects, security agencies, and law enforcement to work on this. Some effective measures have been taken, and we will update with more details soon,” wrote Johnny. “For the blockchain projects that were affected, the KuCoin listing team has contacted them to track, block, and even fork related assets to cut the losses.”
Johnny says the company will conduct a thorough security review of all its systems and data, which he expects to take about a week. As per the team's current estimation, KuCoin will be gradually enabling the withdrawal service for the sake of guaranteeing the security of users’. Johnny said that he and the KuCoin team deeply regret this incident and will continue to make more efforts and optimizations on the security mechanism, and face this incident head-on with no excuses.
For Anyone Involved: The Good, The Bad, And The Ugly
Unless your Ethereum was also in the hot wallet of KuCoin, it falls to the bad guys right now, and that's the bad news. Perhaps the good news is that $200 million accounts for just a percent of KuCoin's total asset holdings. The even better news is that KuCoin and its insurance fund will completely cover any consumer fund impacted by this incident.
In general, KuCoin users may well be impacted, mainly because they will not be able to deposit or withdraw their assets and because, as Johnny states, there could be some turmoil due to the uncertainty about who exactly is involved in those markets. The hacker can still access his account and, in the meantime, use those to manipulate rates, and KuCoin still has to closely track this situation. However, most traders agree that with withdrawals disabled, there is not much opportunity for hackers to influence markets.
From tracking, blocking, and even forking the related assets, the company has been in touch with the projects involved in the incident, discussing all the possible solutions to mitigate its impact. So far, several projects have cooperated with the exchange such as ORN, KAI, NOIA & NWC, which recently completed their Token Swap. Top blockchain security firms like SlowMist has also assisted KuCoin in the relevant investigations. In light of the support, however, these are just a few of the projects that were involved.
As such a goal could have far-reaching repercussions for a project’s true immutability, other projects involved can not process things yet following the proposed plan of the platform. Showing their views on the matter, a lot of users reiterate that the proposal had some possible applications, but such a move is technically challenging and highly impossible, in addition to being potentially dangerous to the integrity of the network.
Roughly two hundred million is a blow and quite a large sum, but it’s only a tiny percentage of KuCoin funds, and it seems like users are going to get their money back. But the fact that KuCoin can afford to make amends doesn’t excuse what appears to be a devastatingly extensive hack. And it’s uncertain whether the leakage of the private key of KuCoin hot wallets will have wider consequences. Above all, it's also the biggest indicator that everything remains a Wild West for traders, for all the promise of cryptocurrency. A hacker, a fraud, or a scam is still just around the corner if the price fluctuations do not get you.