KuCoin hackers turn to DeFi

KuCoin hackers dump stolen funds on DeFi

The hackers who stole $150M of cryptocurrency from KuCoin are converting tokens to Ether on Uniswap, as Tether and Bitfinex freeze their USDT holdings

The hackers who stole $150 million worth of cryptocurrency from crypto exchange KuCoin are now trying to launder the funds.

According to a Sept. 27 tweet by cybersecurity expert Alon Gal, the KuCoin hackers used decentralized exchange (DEX) Uniswap to sell their stolen OCEAN tokens for Ether (ETH).

Chief technology officer at centralized crypto exchange Bitfinex Paolo Ardoino tweeted on Sept. 26 that the firm froze $13 million in USDT stablecoins on the EOS blockchain that came from the hack. Furthermore, stablecoin operator Tether froze another 20 million USDT tokens still sitting in the hacker’s wallet.

KuCoin hackers turn to DeFi
Tether CTO Paolo Ardoino says Tether and Bitfinex have frozen a combined $23 million in ill-gotten gains (Photo: LinkedIn)

As industry news outlet BeInCrypto reported on Sept. 26, the recent hack resulted in cybercriminals stealing over $150 million in Bitcoin (BTC), Ether and other crypto assets from KuCoin’s hot wallets. Fortunately, the firm’s insurance fund covered all of the stolen assets, so the exchange’s users have suffered no loss at all.

Decentralized finance (DeFi) services—given their permissionless nature—fit well the needs of criminals looking for ways to exchange tainted funds. Still, Gal himself pointed out that this is not money laundering as the Ether that the hackers obtained by exchanging OCEAN will still be tainted. He explained that actual laundering may be about to start:

“The hacker is just preparing himself for the laundering by exchanging shitcoins to ETH so he could later either swap for privacy coins (XMR) or use [Ether anonymization service] Tornado. ”

While some may believe that DeFi’s inability to block tainted coins to be a serious problem, the inability of the protocol to impede exchange grows from the features that make it so accessible. The permissionless nature of DEXes makes it so anybody can use them, even those who do not have identity documents or access to the banking system.

The vast majority of those potential traders are not criminals, however.

During a recent exclusive interview with Modern Consensus, Jay Hao—the CEO of top crypto derivatives exchange OKEx—pointed out that more than two billion adults around the world are unbanked. He believes that DeFi could be a solution to this problem:

“This inspirational sector can finally allow us to achieve the goal of providing financial services to every individual.”

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Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.