Analysis: Almost $20 Million of KuCoin Stolen Funds Already Sold Through DEXs

Almost $20M of the $281M worth the tokens drained from the KuCoin exchange are already sold on decentralized exchanges (DEX). This is the standpoint of London-based blockchain analysis provider Elliptic.

DEXs Were The Only Route For The Hackers   

According to a recent report, KuCoin hackers have sold $17.1 million of the $281 million in cryptocurrency tokens on DEXs.

The official analysis reads that the hours after the theft, the hacker attempted to sell part of the tokens at two regular exchanges. The experts remind that unlike Bitcoin, some of the tokens are not censorship-resistant as they are issued by centralized organizations such as Tether, the issuer of the USDT stablecoin. Hence, these organizations can freeze these tokens.

This was the situation with KuCoin as well. After the registered hack, some organizations issuing some of the stolen tokens started to “freeze balances or forcibly move funds”, allowing KuCoin to retrieve the stolen assets.

The hackers used decentralized exchanges where there are no KYC procedures, as the laundering route was essentially blocked. The report also reminds that centralized exchanges are capable of registering if any of the incoming assets originated from KuCoin’s hack.

As per the analysis, the thief started to sell the stolen tokens on DEXs for ETH.

This way, the hacker swapped the stolen assets, which had the risk of being frozen, for a censorship-resistant cryptocurrency. Until September 30, the thief has reportedly sold $17.1 million in tokens for Ether at five DEXs (or DEX aggregators), including Uniswap, Kyber Network, DEX.AG, 1inch.exchnage, and Tokenlon.

According to the report, this might continue.

Finding The Money Trail

Regardless of the above, specialists at Elliptic share that the money trail of the theft is recognizable even on DEX networks.

“Unlike centralized exchanges, which are dead-ends when it comes to tracing the flow of funds, with DEXs everything is recorded and visible on the blockchain”, the analysis reads.

Recently, DEXs have become the logical choice for money-laundering activity in the crypto world. As CryptoPotato reported, the KuCoin hack might be the 3rd largest in the history of crypto assets, draining millions from the hot wallets of the popular cryptocurrency exchange.