On September 26, the Asian exchange KuCoin suffered what is considered the third biggest hack since the creation of Bitcoin involving cryptocurrency exchanges. The criminal exploited security vulnerabilities and had access to private keys, stealing approximately $281 million in cryptography. Last week's attack was bigger than the hack suffered last year by Binance, one of the largest exchanges in the world.
Most of the hacked funds were from ERC-20 tokens, but Bitcoin and a variety of other cryptocurrencies were also stolen.
KuCoin has promised to repay customers, assuring them that the exchange's insurance fund will reimburse them.
KUCOIN BITCOIN EXITS AFTER THE HACK
The hackers tried to sell the stolen assets on centralized exchanges, however they were soon intercepted, as the main platforms have tools to identify the origin of the assets and freeze the accounts that receive these funds.
As a result, some DEXs, as they do not have intermediaries, but are governed by smart contracts, were used in an attempt to withdraw the stolen assets, bypassing the CEXs' anti-fraud procedures.
Hackers then started selling stolen ERC-20 tokens on these platforms without risk of freezing.
DEXs involved in laundering funds stolen from KuCoin.
The hacker focused on four DEXs: Uniswap, Kyber Network, DEX.AG and Tokenlon and had laundered about $13.3 million in coins to date.
Something that drew attention was the measures that some projects considered decentralized introduced to minimize the impacts of the attack.
The Ocean Protocol team, for example, did a fork to reverse transactions. Ampleforth, meanwhile, adjusted its smart contract to block the hacker's address.
These examples of solutions raise questions about the decentralization of some protocols, where decisions can be taken unilaterally, without consultation with the community.
Another situation that leads users to reflect and another clear example of why exchanges should not be used, as the only way to store their crypto.