Bitfinex CTO Defends the Freezing of Millions of USDT in Wake of KuCoin Hack

In an announcement posted on its website, KuCoin revealed that it is currently monitoring several addresses linked to the hack. It is also collaborating with several exchanges and projects to halt the movement of the stolen coins and recover them where possible. KuCoin on Sept. 25 suffered a devastating hack,  losing an estimated $150 million from its hot wallet. Speaking on his Twitter account yesterday, Ardoino gave several updates regarding freezes of potentially stolen USDT on Omni, TRON and EOS chains, as the crypto ecosystem scrambles to contain the situation.

PSA: re #KuCoin hack@bitfinex froze 13M Tether USDt on EOS as part of the hack@Tether_to just froze 20M Tether USDt sitting on this Ethereum address https://t.co/GYmESH44da as precautionary measure.

Stay safe everyone!

— Paolo Ardoino (@paoloardoino) September 26, 2020

One trader pointed out that it was a slippery slope for Bitfinex to freeze the USDT, asking what is to prevent them from stopping there. The Bitfinex CTO was quick to defend the move, saying that Tether is a centralized stablecoin with obligations to “users, regulators and law enforcement.”

Cross-Platform Cooperation

In the meantime, KuCoin confirmed that it is working with other exchanges to track the stolen funds. These exchanges include Binance, Huobi, OKEx, Bybit, Upbit, Bibox, Gate, MXC, BitMax, BigONE, BKEX, BitZ, HBTC, Hoo, Crypto.com, Bingbon, Renrenbit, LBank, Max/Maicoin, CoinW, Bibo, and Bitrue. 

And last one. @Tether_to just froze 1M #USDt on Tron as part of the #kucoin hack.
https://t.co/g4Qes2cvoT https://t.co/4DMAtEPLEg pic.twitter.com/uaC5hllnmB

— Paolo Ardoino (@paoloardoino) September 26, 2020

Speaking on a livestream on Sept. 26, KuCoin Global CEO Johnny Lyu stated that the following addresses are suspicious and are being monitored:

• ETH: 0xeb31973e0febf3e3d7058234a5ebbae1ab4b8c23
• BTC: 1NRsEQRg5EjmJHbPUX7YADVPcPzCQBkyU7
• LTC: LQtFoidy5TmLrPP77MZzgMRffqPsmRfMXE
• XRP: r3mZvvHVLPtRWAujzBsAoXqH11jhwQZvzY
• BCHSV: 15mC7zKbLyErSKzGRHpy6gyqS7GyRpWjEi
• XLM: GBM3PJWNB5VKNOFXCDTTNXPMUNBMYTLAAPYDIIKLHUGMKX7ZGN2FNGFU
• USDT: 1NRsEQRg5EjmJHbPUX7YADVPcPzCQBkyU7
• TRX: TB3j1gUXaLXXq2bstiSMfjQ9R7Yh9DdDgK

Velo Labs on Sept. 26 revealed that it will invalidate all VELO tokens moved to the suspicious addresses and replace all of them.

Important Notice Regarding KuCoin Security Breach

All VELO tokens will be safe and completely secured.https://t.co/WWL6LqqZ0A

— Velo Official (@veloprotocol) September 26, 2020

Reactions to the Hack

Despite the nature of the attack, which worked by compromising the exchange’s hot wallet private keys, KuCoin insists that user data is safe and insurance will cover any losses. At press time, it is unclear exactly how many users have been affected and to what extent. But anecdotal evidence from Reddit does not suggest that substantial user losses have been recorded yet. In a screenshot posted on Twitter showing what appears to be KuCoin Senior Partner Alicia Kao speaking to users in a KuCoin Telegram Channel. She reassures them that their funds are safe and the exchange is investigating the hack.

Kucoin update, finally a response from them pic.twitter.com/dxHnfcvGaA

— lewndart (@loomdart) September 26, 2020

In the meantime, TRON founder Justin Sun has also reacted to the developing situation, offering his sympathy to KuCoin and pledging to assist in recovering stolen funds.

We sympathize w/ all users & @kucoincom team, we hope they can recover their funds soon. @TRONSCAN_ORG will label the hacker's address so that all exchange partners are made aware. @Poloniex are on high alert in case the stolen funds are transferred to Poloniex. https://t.co/Owrm27ZHiw

— Justin Sun🌞 (@justinsuntron) September 26, 2020

BeinCrypto will bring more updates as the story develops.