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Bitcoin’s Price Remains Unfazed Despite KuCoin Hack

Sep 27, 2020
Bitcoins Price Remains Unfazed Despite KuCoin Hack

Johnny Lyu, the CEO of KuCoin Global confirmed a major hacking of the cryptocurrency exchange in an official statement on September 26th, 2020. The hack had affected the exchange’s hot wallets that contained Ether (ETH), Bitcoin (BTC), and ERC20 tokens. The breach had occurred due to a leak of private keys. According to reports, the estimated amount that has been compromised is around $150 million in user funds. Despite the news of this security breach, there was little or minimum movement in the price of Bitcoin. Similarly, other major cryptocurrencies including decentralized finance (DeFi) tokens and Ether also remained mostly unfazed despite the hack. 

Historically, a hack of any cryptocurrency exchange has been known to lead market-wide sell-offs because of the possibility that the hackers may sell their proceeds. However, Tether (USDT) has quickly moved to suspend the transfer of assets that are connected to the security breach. Likewise, some other major exchanges, such as Bitfinex, also moved quickly to freeze USDT that’s connected with the hack. This swift response from major exchanges and Tether could prevent hackers from being able to move most of the funds. According to the chief technical officer at Tether and Bitfinex, Paolo Arduino, the two entities had frozen a total of $33 million. 

If early estimates are correct in their calculation and the exchange has lost $150 million, then it would be about 22% of lost funds. He said that Bitfix had frozen about 13 million Tether (USDT) on EOS whereas Tether had frozen 20 million on Ethereum as a precaution. Lyu said in the official statement that KuCoin has gotten in touch with OKEx, Binance, Huobi, ByBit, and BitMEX. The company also added that they were cooperating with relevant blockchain projects and law enforcement. At least for the near future, it would be extremely challenging for the hackers to be able to move the stolen funds. 

The CEO said that they had taken some effective measures and would provide an update with the details soon. A small portion of the hacked funds are in the form of Bitcoin, but the vast majority are in the form of ERC 20 tokens. The risk associated with tokens is that DeFi protocols could potentially be utilized by hackers for eliminating the ‘tainted’ tokens. But, according to Dovey Wan, the Primitive Crypto founding partner, hackers are struggling to handle these tainted funds. She said that the hackers are not experienced and they tried to sell the stolen funds on Binance. 

She stated that they didn’t have any idea how to liquidate through dex and this could make it a problem for them. There has been a short-term trend reversal seen in Bitcoin, after it reclaimed the $10,407 whale cluster that became a support area. It was reported on September 26th that whale clusters had grown following the recent rally BTC had made at $10,700. This data shows that whales have been accumulating at a price higher than $10,000, which shows a strong market sentiment as a whole. The resilience of Bitcoin despite the hack shows the strength of the existing trend.

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