Kucoin was stolen for 150 million, global exchanges were cracked down, and DeFi may become a safe haven for hackers

In the early morning of the 26th, a large number of abnormal token withdrawals appeared in the hot wallet address of Kucoin Exchange, involving BTC, ETH, USDT, etc., with a total amount of approximately US$150 million.

Subsequently, Kucoin officially announced that the total amount involved accounted for a relatively low proportion of Kucoin's total funds held, and the assets in the cold wallet were not affected. At the same time, Kucoin suspended deposits and withdrawals and redeployed hot wallets.

In a subsequent YouTube live broadcast, Kucoin CEO Johnny Lyu admitted that the platform had been hacked. Kucoin and its insurance fund will bear all the losses suffered by users in this incident.

He also mentioned that the funds were stolen because the private key of the hot wallet was leaked, and the platform will gradually open up currency recharges and withdrawals within a week.

The theft of Kucoin has made many people realize once again that the asset security of centralized trading still needs to be alerted, otherwise it will become a cash machine for hackers. Secondly, global centralized exchanges have once again joined forces to jointly block the stolen funds, with remarkable results. Finally, some people have discovered that not only derivatives, but DeFi may be an excellent way for hackers to transfer stolen funds.

Kucoin was stolen, and centralized exchanges were blocked worldwide

How did Kucoin get stolen? Johnny Lyu reviewed the whole process in detail during the live broadcast.

It turned out that at 2:52 a.m. on the 26th, the platform received the first risk control system alarm due to an abnormal ETH transfer. Subsequently, the platform's technical team began to race with the hacker. In the process of locating the problem and transferring the hot wallet assets to the cold wallet, the above-mentioned $150 million in assets were transferred by the hacker.

At 5 a.m. on the 26th, Kucoin began to urgently contact many exchange peers including Binance, Huobi, OKex, Bybit, etc., in order to block suspicious addresses related to abnormal fund transfers, and contact global police to assist in the investigation.

Interestingly, after stealing the funds, the hackers began to transfer them on a large scale. Unlike previous cases where hackers continuously split the funds and tried to launder the coins through various means, this time, the hackers actually transferred the funds in batches to major exchanges.

As a result, companies like Matcha quickly froze 11,000 USDT that flowed into their platform, Bitfinex froze 13 million USDT on the EOS chain, and Tether also performed outstandingly, directly freezing more than 20 million ERC-20 USDT in the hacker's address involved. In addition, companies including Binance also froze the cryptocurrency funds involved.

The hacker's series of bizarre behaviors, which were totally inconsistent with his powerful ability to steal funds, surprised many people. Generally, there must be a plan to launder funds, and this hacker was like a reckless person who was in a hurry to use the money.

Super Jun also posted a Weibo post to tease: The hacker who stole Kucoin this morning, the picture is a bit funny...

DeFi, regulation will only be late, but it will definitely come

Wan Hui teased the hacker on Weibo: What is this level? Learn about DEX? DEX+Tornado Cash is the basic operation, right? This hacker obviously doesn't understand DeFi.

Wan Hui further told a fact that is worth thinking about, that is, with the popularity of DeFi today, decentralized exchanges may give hackers an opportunity to take advantage.

She even gave a way for a DeFi-savvy hacker to do it.

First of all, exchange USDT for DAI on Curve as soon as possible. DAI is the only stablecoin that will not be blacklisted. Compared with USDT, Tether can directly freeze the address.

Secondly, exchange DAI for ETH/DAI LP on Uniswap, collect transaction fees while mining UNI.

Then, slowly launder your money through Tornado Cash.

Wan Hui believes that any hacker with normal IQ can think of this.

In the future, will DeFi, which does not require real names, become a channel for hackers to launder money? Wan Hui believes that DeFi is a neutral financial tool that can be used to fight against the various drawbacks of centralized finance and defend private property. Correspondingly, evil forces can also use it to do what they think is "reasonable" operations.

"All privacy is equal, and between a normal transaction and an abnormal transaction, the information provided by the latter is actually more valuable. The significance of on-chain privacy is actually to reduce the entropy of the system, thereby achieving a more harmonious stability at the macro level," she said.

In addition, Super Jun also imagined an operation to launder funds using DeFi, for example, opening a long order for SWRV on an exchange, buying 50 million USDT for SWRV on Uniswap, then closing the long order and opening a short order, and then dumping SWRV.

Chao Chaojun also joked: "Then you can send a tweet, I'm sorry, I failed."

Although these operations are hypothetical, it can be speculated that DeFi may really become an entry and exit for problematic funds. This is very important because many people believe that the biggest problem of DeFi is not the short-term prosperity brought about by hype, but the crackdown from regulatory authorities. If the above situation really occurs on a large scale, supervision will surely come sooner or later.

Of course, this is also an opportunity for DeFi. After all, once it is regulated, compliance is worth looking forward to. At that time, it means that DeFi must have developed to a certain extent. Is this process very similar to the development of BTC in the world?