Top Singaporean-based crypto exchange Kucoin recorded a security incident on its cryptocurrency exchange on September 26.
In an official statement published on its website, Kucoin confirmed that part of Bitcoin, ERC-20 and other tokens in their hot wallets were transferred out of the exchange estimated to be $150 million based on this Ethereum address.
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In a timeline of the security incident, Kucoin Global CEO Johnny Lyu said:
“At 02:51 AM (UTC+8) on September 26, 2020, we received an alert from the risk management system for the first time, showing that an abnormal ETH transaction occurred with the TXID: 0x4b738df5d7f12e3fa1cbe83b8165c542da461ef0c9255fc1a3f275259a92623b”
What are the steps taken by Kucoin?
After the security incident was spotted due to an alert received by the crypto exchange risk management system regarding the abnormal balance of their hot wallets. KuCoin operation team urgently closed the server of the wallet and their wallet team were able to transfer most of the remaining funds to their cold storage.
Kucoin subsequently confirmed that assets in their cold wallets are safe and have discarded the old hot wallets. The top crypto exchange will be upgrading the whole risk management system of their wallets to avoid future occurrence.
Kucoin contacts major exchanges
In regards contacting other crypto exchanges to track the stolen funds and maybe recover them. Kucoin Global CEO Johnny Lyu said:
“We are in contact with many major crypto exchanges such as Huobi, Binance, OKEx, BitMax and Bybit, as well as blockchain projects, security agencies, and law enforcement to work on this. Some effective measures have been taken, and we will update with more details soon”.
Paolo Ardoino, the chief technical officer at Bitfinex and Tether via a tweet claimed both firms have froze a total of $33 million which represents 22% of the hacked funds.
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
Will users be paid back lost funds?
Kucoin has promised to cover any lost funds on the part of its users from the exchange insurance fund which was set up in 2018. Although all deposits and withdrawals have been disabled and are expected to resume within a week.
Kucoin is investigating the security incident with law enforcement and has also offered rewards of up to $100,000 to those who can provide valid information in regards the security incident.