Back in April 2020, Cointelegraph took a close look at the KuCoin cryptocurrency exchange. When we investigated the apparent blocking of the primary domain name that arose as a result of a lawsuit in the jurisdiction of the Supreme Court of Singapore, we concluded that:
In the absence of clarity from any of the people mentioned in this article, or from the company itself, users of the KuCoin platform will likely want answers as to whether they are sending their money to Singapore, Seychelles, or China – or elsewhere in peace. …
KuCoin now lacks $ 150 million as a result of what the exchange described as a “security incident,” and although stock exchange managers declined to answer our questions five months ago (and indirectly indicated that our accurate reports were incorrect), their clients may keep them responsibly hallway.
Lack of clarity
In March 2020, KuCoin faced the prospect of a class action lawsuit involving “false and / or misleading statements by account holders.” In another lawsuit filed by Chase Williams against KuCoin in the Southern District of New York, the exchange was allegedly involved in an unlicensed offering of securities. In addition to KuCoin, the latest lawsuit named three people associated with KuCoin: Michael Gunn, Johnny Liu and Eric Dunn.
Days before these legal issues arose, KuCoin announced a restructuring of the company, which included the transfer of the company’s trademark from one registered person in the Seychelles to another and the appointment of a new director whose affiliation was previously unknown to the stock exchange. …
If the opacity of the monarchy worries, another age-old question raises flags in a vicious shade of scarlet fever. Where is KuCoin? Chase Williams suggests that it started as a Seychelles company headquartered in Hong Kong and then moved to Singapore, and believes that the three directors named in the lawsuit live there. But as with many cryptocurrency exchanges, the actual location of her office (if any) and employees is unclear.
Lost money, knowledge gaps
This is the ancient wisdom of cryptocurrency. Or at least as old as the industry itself. “No keys, no coins.” It simply means that when your money is owned by a third party, you have no control over it.
Despite countless warnings about the dangers of leaving money on exchanges, cryptocurrency traders continue to believe that the security of their exchanges (and the safety of their employees) is sufficient to prevent the loss of tokens. Despite countless warnings, she is wrong.
Whether it’s a hack, a social attack, or a simple exit scam, criminals have a hard time resisting the temptation of free money. “I robbed banks because there’s money,” bank robber Willie Sutton said succinctly (if not true). And stock exchanges will remain an attractive target as long as cryptocurrency holders continue to leave their money in their hot wallets.
Johnny Liu of KuCoin insists that clients “be confident that if a used fund is affected by this incident, it will be fully covered by KuCoin and our insurance fund.” As the embezzled funds began to move to other exchanges, evidence began to emerge that not everything was wasted. Bitfinex’s Paolo Arduino noted in a tweet that his platform froze, for example, $ 13 million in USD, and this type of collaboration between exchanges could help deter thieves in the future.
Of course, I hope KuCoin has the resources in the insurance fund to cover losses of this magnitude. Johnny Liu seems to believe it: “Yes, that’s enough. Since the beginning of 2018, we have created an insurance fund to address these unexpected security issues. ” Oslo Børs may post a wallet address to prove that such a fund exists and that it will pay for all valid claims. On the other hand, managers may not be clear about such basic things as their location, company structure, and the legal status of their domain name – so perhaps this level of transparency is additional.
But it’s a simple solution that anyone can implement, and it ensures that your money is not stolen from a stock exchange hack. It’s so simple and so obvious that the owners of a cryptocurrency worth around $ 150 million are now attacking themselves for not doing it.
Do not store cryptocurrencies on the exchange if you are not using the service.
No keys, no coins.