After the KuCoin hack, traders don’t seem very worried that the Ethereum price could collapse.
Analysts say that the unknown perpetrators behind the KuCoin hack the stolen ERC-20 token to Uniswap sell . The sale of tokens on the decentralized, Ethereum-based exchange enables the hacker to gain access to Ether ( ETH ), but that does not mean that they have been washed.
All transactions made via the Ethereum blockchain network can be traced using blockchain explorers. So even if the tokens were converted into ether, the stolen funds would still leave traces. It also means that the exchange can (and probably will) block addresses associated with the contaminated funds.
Selling tens of millions of dollars‘ worth of tracked funds immediately after being hacked is risky
All major exchanges are on high alert. In this particular case, Tether ( USDT ) frozen the funds related to the KuCoin hack.
As Cointelegraph previously reported , Bitfinex and Tether technology director Paolo Ardoino said that Tether had frozen USDT33 million. In another statement, Ardoino stressed that there are strict guidelines that must be followed in order to freeze funds. He explained :
„There are two situations in which Tether can go into freezing funds: – Law Enforcement / Regulatory Claims – Funds are sent to unrecoverable addresses (at Tether’s discretion). This facility does not allow crypto users to engage in stupid scams to participate or to be less attentive. “
With Tether actively tracking the funds and major exchanges such as Binance and Bybit being contacted by KuCoin, it has become increasingly difficult to get rid of them. KuCoin CEO Johnny Lyu said :
„We are in contact and working on the case with many major crypto exchanges such as Huobi, Binance, OKEx, BitMax and Bybit, as well as blockchain projects, security agencies and law enforcement agencies. Some effective measures have been taken and we will provide more details soon.“
The hacker sold the ERC-20 tokens to get to ETH. But the transactions and Ethereum addresses can be traced with Etherscan.
With the large, decentralized exchanges lacking privacy solutions, the ERC-20 tokens leave traces for the exchanges to follow. Therefore, many analysts are rather relaxed. They do not believe that selling Ether tokens will put pressure on the Ether course.
Will Uniswap become a target for stolen coins?
According to Ardoino, selling the stolen ERC-20 tokens on a decentralized exchange like Uniswap has interesting implications.
He suspects that in the future, decentralized exchanges would implement data protection solutions, such as confidential transactions, to attract more users. Ardoino said :
„That could have interesting implications. With money laundering happening on a transparent DEX, questions are raised: Will the liquidity providers be affected? Privacy is key and likely the next DEX will use confidential transactions.“