KuCoin Hack – Five Things We Learnt

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  • Saturday’s KuCoin hack resulted in $150 million worth of tokens stolen from the exchange
  • KuCoin are currently investigating the methodology of the attack
  • We have learnt several things already from Saturday’s hack

Saturday’s KuCoin hack saw $150 million worth of tokens stolen from the popular exchange. Investigations are still ongoing as to the methodology of the KuCoin hack, but there are already several things we have already learnt from the event.

Methodology Still Unknown

KuCoin are still investigating how the hack occurred, but what they have revealed is that only their hot wallets were affected. This is less severe than hackers accessing their cold wallets, which would have represented a far more serious security lapse.

At the time of writing the wallet contains $193 million worth of tokens, including $19.74 million in USDT, $4 million in ETH, and a staggering $33.8 million in ACOIN. KuCoin have promised to update the community when their investigations are complete.

Hack Was Fourth Biggest in Crypto History

The KuCoin hack was the fourth biggest in crypto history in dollar terms. The CoinCheck hack of 2018 was the biggest yet with $54 million worth of crypto stolen, followed by Mt. Gox ($460 million) and BitGrail ($196 million).

It does however make the KuCoin hack the biggest of 2020 so far.

Hacker Blocked From Cashing Out

The hacker clearly didn’t know too much about cryptocurrency, given that he tried to send USDT to Binance to cash it out, not realizing that the exchange and Tether had already blacklisted the addresses associated with the tokens.

Anyone who has spent any time researching hacks in the space will know that many exchanges, especially the big ones, are quick to blacklist wallets associated with hacks so the perpetrators can’t cash out there. This leaves the perpetrator with a reduced number of options when it comes to cashing out his haul.

Losses Will be Covered

KuCoin has confirmed that all users who lost funds in the hack will be recompensed through their insurance scheme. Such schemes show how far crypto has come in recent years – only recently have exchanges begun to offer customers coverage if their funds are stolen.

Not all exchanges offer such facilities, and users should assume that unless there is a specific policy that covers loss their funds are at risk.

Not Your Keys, Not Your Crypto

Not so much something we learnt as much as something that we were reminded of – coins stored on exchanges don’t belong to you. The Proof of Keys movement eulogizes this fact, urging users to only leave on exchanges what they need to trade and keep the rest in a wallet to which they have the private keys.

Markets Remain Unmoved by KuCoin Hack

The KuCoin hack will go down in history as one of the biggest in crypto history, but it is a reminder that, even though hacks still occur, exchanges are better placed to protect customers than ever before.

The fact that the crypto markets barely reacted to the news also reflects the positivity in the markets in general, given that large scale hacks often result in a sea of red, at least temporarily. Some have taken this as a sign of strength in the market right now, which may or may not be true.