It has been a while since a major cryptocurrency exchange was hacked successfully, KuCoin has fallen victim to a major security incident. As much as $150 million in crypto assets may have been sent to unknown wallets.
Avoid KuCoin for now
It is a well-known fact that centralized crypto exchanges continue to pose major security threats. Trusting a third party with one’s funds is asking for trouble. KuCoin illustrates that point perfectly. A large withdrawal was noted by the security team in the past few hours. Later on, it was confirmed the exchange’s hot wallet private key has been compromised.
In the report, the team mentions how Bitcoin, ERC-20 tokens, Ethereum, and other assets have now fallen into the wrong hands. While all funds in the cold wallets will remain safe from harm for now, this incident is not positive by any means. It is a clear sign of why users need to retain control of their funds at all times.
There is no indication as to why might be behind the attack. Other exchanges facing a hack often investigate whether one of their own employees is responsible. It will be interesting to see who the culprit is for KuCoin. Gaining access to a hot wallet and draining $150 million is a significant feat, albeit not for the right reasons.
For the affected users, compensation is in order. The KuCoin team confirms it will cover all losses out of their own pocket, the way things should be handled. Whether this will be done in one sweep, or through partial compensations, remains to be determined. Settling the matter as quickly as possible is beneficial to all parties involved.
Moving to Alternative Solutions
When incidents like this occur, more and more people will actively explore alternative options. In most vases, they simply move to a different centralized exchange which poses the exact same risks. Few will begin looking into DEXes, which certainly have a lot of potential, yet they don’t support all assets.
What this means for the future of KuCoin, remains unclear. It would not be the first exchange to go bankrupt after having to compensate users. At the same time, KuCoin has an insurance fund to cover the costs of incidents like these. Resuming operations will not pose too many challenges, yet this incident should not be dismissed nor forgotten too easily either.