KuCoin To Recover ‘$150 Million Hack’ Loss Through Insurance

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KuCoin-1 (Courtesy: Twitter)
KuCoin-1 (Courtesy: Twitter)

Following the KuCoin hack, the CEO of the exchange, Johnny Lyu, has explained, in a live session, the company’s next move to salvage the situation while also giving comfort to users.

In a dedicated live stream, KuCoin’s CEO noted that although why he cannot reveal how much of the company’s total assets were affected during the hack, the stolen fund amount is “small for KuCoin.” The exchange will cover all the losses with its insurance fund.

The company first noticed the abnormalities at 2:51 AM, Sept 26, when it received an alert from its internal risk-monitoring system. More alerts followed, indicating abnormal transfers from the hot wallet.

  • At 3:01 AM, the exchange received an alert about its remaining balance from the monitoring system. Three minutes later, more alerts came in showing abnormal XRP withdrawal, which was followed by another alert that the company’s hot wallet is “running out of balance.”
  • Subsequent alerts between 3:05 AM and 3:40 AM showed abnormal BTC withdrawal alongside other tokens.
  • While the abnormal withdrawals were ongoing, the company set up an urgent task force and then shut down its wallet servers. However, the shut down did not do much to stop the hackers as the abnormal transfers continued.
  • At this point, KuCoin realized that the private keys of its hot wallet had leaked. The company then started moving the remaining balance in its hot wallet to cold storage at 4:20 AM. The process took about 30 minutes to complete.
  • Lyu said the exchange would publish the addresses used by the hackers on its official channels. An earlier report on the hack shows that the Ethereum address supposedly used for the operation contained over $150 million in ETH and ERC-20 tokens.
  • KuCoin is now in contact and working with the international police, its largest clients, and industry experts for an in-depth investigation into the incident.
  • The CEO also said they had asked most crypto exchanges, including Binance, Bitfinex, OKEx, BitMEX, and Houbi Global, to blacklist the hackers’ wallet address and assist with the investigation.
  • The crypto community was quick to swing into action to assist KuCoin in its request. Bitfinex CTO Paolo Ardoino said they have already frozen 13 million USDT on EOS that was part of the hack, while Tether froze the 20m USDT on Ethereum in the ETH address used for the hack.
  • While trading services are still available, withdrawals and deposits will remain closed until the exchange completes its wallet upgrade.