Analysts say the unknown hacker behind the KuCoin rape is selling the stolen ERC-20 tokens at Uniswap. Although selling the tokens at the Ethereum-based decentralized exchange allows the hacker to obtain Ether (ETH), this does not mean he was washed away.
All transactions made on the The News Spynetwork are traceable using blockchain exploiters, which means that even if the tokens were converted to Ether, the stolen values would still leave traces. This means that exchanges can (and probably will) suspend any exchange address that is associated with the contaminated funds.
Trying to sell tens of millions of dollars in funds tracked immediately after a violation is risky. All major exchanges are on alert and in this particular case Tether (USDT) has frozen the funds linked to the KuCoin hack.
As the Cointelegraph reported earlier, Bitfinex and Tether’s technical director, Paolo Ardoino, said Tether froze $33 million in USDT, but Ardoino emphasized in a follow-up statement that there are strict guidelines that must be followed to freeze funds. He explained:
„Tether may decide to freeze funds in 2 situations: – compliance/regulatory request – funds are sent to irrecoverable addresses (totally at Tether’s discretion). This ability does not give cryptomode users the right to participate in stupid scams or pay less attention“.
With Tether actively tracking funds and major exchanges such as Binance and Bybit contacted by KuCoin, it became increasingly difficult to sell the funds. KuCoin CEO Johnny Lyu said:
„We are in contact with many leading cryptomote companies such as Huobi, Binance, OKEx, BitMax and Bybit, as well as blockchain projects, security agencies and law enforcement to address this. Some effective measures have been taken, and we will update them with more details soon. ”
The hacker sold the ERC-20 tokens to get ETH, but the Ethereum transactions and addresses can be tracked using Etherscan.
Ethereum is not yet ready for DeFi, some critics say
Since the main existing decentralized exchanges have no privacy solutions, the ERC-20 tokens leave traces for the exchanges to follow. For this reason, many analysts are not concerned that the movement and sale in the Ether token market puts pressure on the price of Ether.
Is Uniswap the preferred destination for stolen coins?
He suggested that in the future, decentralized exchanges implement privacy solutions, such as confidential transactions, to attract users. Ardoino said:
„This could have interesting repercussions. While we are examining laundering while it takes place in a transparent DEX, some considerations arise for me: will liquidity providers be contaminated? Privacy is paramount, the next DEX should probably use confidential transactions. ”