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Kaspersky’s Expert Take on KYC and AML: Stock vs Crypto Exchanges

Exclusive Interview with Yeo Siang Tiong, Kaspersky: Part Two (Link: Part One)

In Part Two of our interview, Yeo Siang Tiong, General Manager for Southeast Asia, Kaspersky shared how Kaspersky provides cybersecurity solutions for stock and crypto exchanges to address KYC and AML concerns. He also walked us through the Kaspersky Application Security Assessment and explained its significance in safeguarding assets in crypto exchanges.

What are the main differences in cybersecurity solutions for stock exchanges and crypto exchanges, in terms of KYC and AML?

The term “know your customer” originally came from financial services. Banks needed to identify their customers, make sure they didn’t cheat, and be able to check their credit history. In 2017, according to a Thomson Reuters survey, KYC procedures took an average of 32 days, up from 28 days in 2016.

The use of digital signatures, once viewed as a possible solution to these problems, cannot obviate the authenticity checks of documents required by KYC procedures. And digital signatures can be forged or stolen.

To safeguard businesses from AML schemes, Kaspersky’s Automated Fraud Analytics helps businesses minimize fraud-related costs and reduce the risk of fines for non-compliance from regulating organizations. It adds an extra level of knowledge of industry-specific fraud and money-laundering scenarios, through access to fraud intelligence, combining this knowledge with advanced technologies that automatically detect serious incidents at early stages.

With the help of machine learning algorithms, the solution then correlates these findings with the patterns of account takeover, new account fraud, and money laundering, via Kaspersky Fraud Prevention Cloud and global fraud intelligence based on big data. Due to the linking and mapping functionality, the solution can also automatically identify cross-organizational money laundering schemes by looking for correlations between typical profiles, devices used, behavioral patterns and many other details of the sessions that are known to be involved in similar operations.

Can you walk us through the Kaspersky Application Security Assessment for crypto exchanges? What are the differences between, black-box, grey-box and white-box testing?

Kaspersky’s Application Security Assessment Services uncover vulnerabilities in applications of any kind, from large cloud-based solutions, ERP systems, online banking and other specific business applications, to embedded and mobile applications on different platforms (iOS, Android and others).

Kaspersky Application Security Assessment Services help application owners and developers to:

i) Avoid financial, operational and reputational loss, by proactively detecting and fixing the vulnerabilities used in attacks against applications

ii) Save remediation costs by tracking down vulnerabilities in applications still in development and test, before they reach the user environment where fixing them may involve considerable disruption and expense.

iii) Support a secure software development lifecycle (S-SDLC) committed to creating and maintaining secure applications.

iv) Comply with government, industry or internal corporate standards covering application security, such as PCI DSS or HIPAA

Applications assessed can include official web sites and business applications, standard or cloud-based, including embedded and mobile applications. The services are tailored to your needs and application specifics, and may involve:

i) Black-box testing – emulating an external attacker

ii) Grey-box testing – emulating legitimate users with a range of profiles

iii) White-box testing – analysis with full access to the application, including source codes; this approach is the most effective in terms of revealing numbers of vulnerabilities

Stay tuned for Part 3 of the interview on the latest mining malware for 2020!

Why Crypto Exchanges Must Reinvent Themselves to Stay Relevant or Else Face Extinction

Several crypto exchanges have shut down their operations due to various reasons. For example, many crypto exchanges have found themselves having little business to sustain the cost of staying open. Others have closed because of the lack of meeting regulatory requirements.

However, cryptocurrency exchanges are not going away. There is already an adequate number of exchanges to deal with the need of the industry for a long time to come.

To better serve customers, cryptocurrency exchanges will have to reinvent themselves more than just trading venues. If this is not done, then many exchanges will eventually terminate their operations.

Here are two ways in which cryptocurrency exchanges can remain relevant in their businesses.

1. Providing Cryptocurrency Value-Added Services

Cryptocurrency users usually find it challenging to deal with taxes. This is, therefore, a great opportunity that crypto exchanges can maximize to get an additional source of revenue.

The regulation now requires cryptocurrency holders to pay their taxes. Crypto exchanges have a huge responsibility to encourage and guide their users about the cryptocurrency tax filling.

Furthermore, cryptocurrency exchanges should provide other value-added services deemed necessary to consumers.

2. Giving Consumers What They Need

As the searching for yields continues intensifies in crypto native money markets, DeFi (decentralized finance) has created a new form of investment within the crypto industry. Not everyone wants to use complicated Dapps or run a browser wallet to access lending markets like dYdX and Compound.

Crypto exchanges have the opportunity to open themselves to a wider variety of services, enabling them to attract new customers and enhance their relationships with existing clients.

Lending markets provide the opportunity to passively earn revenue while keeping clients’ funds parked in stablecoins, therefore eliminating exposure to volatility risk usually experienced in the crypto market.

The introduction of proxy saving accounts gives crypto exchanges the option of earning a yield while they are on the sidelines waiting for a suitable opportunity.

Already margin lending exists on many exchanges, but the rates are extremely low to attract significant capital. Therefore, cryptocurrency exchanges can create money markets where customers can lend and borrow cryptocurrency. They can also introduce saving account experience in which customers can begin their savings journey.

In this way, crypto exchanges can introduce something similar to the DAI Saving Rate provided by Maker.

Dharma is also a good DApp, which serves as a saving account on Compound.

Moreover, Coinbase recently unveiled a similar product to give customers the ability to deposit USDC in a makeshift savings account.

Crypto exchanges can, therefore, adopt such similar interfaces to give customers unified access to yields.

Conclusion

Cryptocurrency exchanges must develop themselves to be in line with significant paradigm shifts taking place in the cryptocurrency ecosystem. As the market matures, they also have to reinvent themselves to become more like their traditional peers. But the way cryptocurrency exchanges approach and view such changes would significantly determine which players dominate the market in the near future.

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Senior Worker at Bithumb Triggered Hacking Vulnerability

A senior worker at Bithumb, a leading South Korean crypto exchange, is in a tight spot after a Korean court discovered that he is liable for web safety legislation breaches. As a result, his misdeeds left the crypto exchange vulnerable to a 2017 hack that led to the loss of cryptocurrency holdings worth $6 million USD. The personal data of 31,000 users was also lost.

Costly mistakes

Prosecutors noted that the worker made serious safety protocol mistakes. As a result, they are pushing for him to be fully liable for the dire choices he made. The 48-year-old man who was only identified using his surname, Lee, finds himself in hot soup as he now may be charged as an accomplice in the hacking incident.

The court noted that Lee was ignorant as he did not install an antivirus in his business PC. Additionally, he did not encrypt user information.

Nevertheless, Bithumb is not off the hook yet because the judge stated that the crypto exchange did not act hastily and prudently to avert the hacks. Additionally, the judgements found that Bithumb had also not done enough to prevent follow-up assaults on the exchange.

Crypto exchanges hacked at an alarming rate

Despite the 2017 Bithumb hacker being arrested and incarcerated for three years, crypto exchanges have been on the receiving end because a number of them have been falling prey to hackers.

For instance, in May 2019, one of the largest crypto exchanges in trading volume, Binance, became a victim of a large scale security breach, whereby 7000 Bitcoins were stolen in one single transaction by hackers. Notably, hackers utilize both internal and external methods, such as viruses and phishing, to gather a large number of 2FA codes, API keys, and other vital information.

Conversely, according to a CipherTrace report, in 2019, hacks, scams, and thefts cost the crypto sector a whopping $4.4 billion. Therefore, showing the need for crypto exchanges to integrate stringent measures to curb hackings.

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Singapore’s Court of Appeal Finds Crypto Exchange Culpable of Malice in Momentous Ruling

In a landmark ruling, the Court of Appeal in Singapore noted that Quione, a cryptocurrency exchange, was disloyal to reverse several transactions on its network. As reported by Singapore Law Watch on Feb. 25, this action constituted a breach of contract; hence the law had to take its discourse.

Quione’s defense does not hold water

Quoine tried to defend itself of any wrongdoings by stating that it had the entitlement of unilaterally canceling seven orders made by mistake by a trader called B2C2 in a sell-off involving ethereum and bitcoin. It added that the other party transacting with B2C2 had mistakenly thought that the trades were based on market price, and the latter was aware of this blunder.

Nevertheless, the crypto exchange’s plea fell on deaf years as the apex court noted that malice was involved when the transactions were being reversed. As a result, Quione has to pay for the damages accrued that will be determined following a thorough assessment.

The case sets the ball rolling

This case has opened a new page in the Singaporean justice system as it is the first legal case involving cryptocurrencies. According to the announcement, “It is also believed to be the first in the Commonwealth to deal with the question of how the legal doctrine of mistake should be applied when contracts are made by computerized trading systems, without human involvement.”

In April 2017, the reversal was instigated by an error in Quoine’s software that made it difficult to attain external data, and this prompted the termination of new orders. As a result, the deep price of B2C2’s trade became inevitable.

In March 2019, the Singapore International Commercial Court slapped Quione with a ruling where it was found to have breached both trust and contract. The appeal made has, therefore, follows a similar trajectory based on the apex court’s judgment.

Singapore has been making important steps in the crypto space. For example, in October 2019, CIMB Bank Singapore partneredwith iTrust to instigate the first-ever blockchain trade financing. A month later, Crypto.com collaboratedwith a local payment processing portal Xfers to boost cryptocurrency adoption in the nation. It seems Singapore will continue making headways in the crypto sector based on this new development.

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UK’s Financial Watchdog Raises the Alarm on BitMEX Being Unauthorized

The Financial Conduct Authority (FCA) in the UK mandated with regulating financial markets and service firms in the nation has blown the whistle on Seychelles-based crypto exchange BitMEX for not being authorized. According to the regulator’s statement, the exchange was operatingin the UK without being given the green light by the financial watchdog.

BitMEX on the receiving end

BitMEX found itself in unfamiliar territory because the FCA insisted that the firm has been providing financial products and services to UK residents without being authorized.

The FCA noted, “Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorized by us. However, some firms act without our authorization and some knowingly run investment scams.”

The regulator added that BitMEX was indulging in regulated activities that necessitated authorization as this was instrumental in curbing runaway investment scams. The FCA also presented a myriad of caution that scammers usually provide false details or at times alter their contact information over time to new physical addresses, telephone numbers, or email addresses.

As a result, precautionary measures were of the essence as the FCA enlightens UK residents to only deal with accredited financial firms as per the Financial Services Register.

UK’s footsteps in crypto

The United Kingdom has also been making waves in the crypto space. For instance, in December 2019, the high court granted a freezing order over £1.5 million worth Ethereum and Bitcoin against a crypto trading firm and its directors. This incident became the second known one where a UK court had treated cryptocurrency as property.

Additionally, last month, DAG Global, a UK financial services company, made headways as it attemptedto become the first UK bank to support crypto businesses based on the roaming void.

The former Head of Technology for the Barclays group, and former CTO at Starling Bank in the UK, Mark Hipperson is planningto launch a regulated crypto bank with his digital banking venture Ziglu. Ziglu has applied to the UK’s Financial Conduct Authority (FCA) to become a regulated issuer of electronic money. Currently, only UK residents who are over the age of 18 are permitted to use Ziglu’s services and are eligible to apply for an account.

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Binance Acquisition of CoinMarketCap for $400M Just a Stone’s Throw Away

Binance, one of the largest crypto exchanges globally, is reportedly ready to splash out nearly $400 million to attain CoinMarketCap, the most popular crypto data aggregator. It is alleged that the deal is in the final stages, and it is just a matter of time before it is revealed later this week.

Enormous investments in the crypto space

Once finalized, the acquisition of CoinMarketCap by Binance is touted to be among the largest ones in the crypto sector. Other notable purchases include Circle’s attainment of Poloniex for $400 million and the sale of Earn.com to Coinbase for $120 million, among others.

The Malta-based firm remains at the forefront of finalizing this deal because CoinMarketCap has emerged to be a behemoth in generating web traffic as it has drawn 207.2 million visitors in the past six months. Binance has been able to attract 113.8 million visitors over the same period, and this represents 80% less traffic compared to that of CoinMarketCap.

Source: The Block

Eugene Ng, a former employee of Barclays and Deutsche Bank said, “Who would ever trust CoinMarketCap after this, doesn’t make sense. A stake from Binance might likely work better than an acquisition, just defeats the purpose of having a balanced and neutral index aggregator.”

Earlier this year, Changpeng Zhao (CZ), Binance CEO, had teased about two significant acquisitions by the company. Time will, therefore, tell whether the purchase of CoinMarketCap is one of them.

Binance on a purchasing spree

Binance has made a name for itself based on its considerable purchasing power. Some of the companies it has acquired include WazirX, an Indian cryptocurrency exchange, and DappReview, a blockchain data startup. Recently, the firm delisted all FTX leveraged tokens because clients were not in a position to comprehend them.

If the deal involving CoinMarketCap succeeds, this will be a sign of maturity in the crypto space. Notable steps are being made in this sector, as evidenced by the partnership forged between Crypto.com and leading tax providers in simplifying tax reporting in just a click of a button.

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Coinbase Welcomes New Chief Legal Officer from Facebook's Legal Team: Introducing Paul Grewal

Coinbase proudly announced in a July 8 blog post that a new addition will be made to the crypto exchange’s legal team.

Paul Grewal, a former US magistrate judge in California and Deputy General Counsel for Facebook, will be joining the ranks of the digital currency exchange.

Coinbase indicated that the opportunity for crypto is currently on the rise and that it is therefore a crucial moment for them to invest in “world-class leaders and teams that can pave the way for the next phase of crypto awareness and adoption.”

According to Coinbase, Paul Grewal is a good addition to the Coinbase team, as his background is diversified and ranges from a legal background to a business profile. He is known to have significantly impacted the tech industry, due to his role in the ongoing Apple vs. Samsung and Oracle vs. Google tech cases.

Also, he regulated legal issues and grew his legal team when he was working for Facebook. When prompted about the reason behind joining Coinbase, Grewal said:

“I came to understand the vision for an open financial system for the world. And I got to see just how talented and committed the entire Coinbase team is in making that vision a reality.”

With Paul’s expertise, Coinbase hopes to achieve new heights in the crypto field. The crypto exchange has been working on adding new crypto assets to their listings for awhile. Currently, Coinbase brokers cryptocurrency exchanges of Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Tezos, among other cryptos. Coinbase is considering expanding its digital assets to include VeChain, Aragon, Bancor, Origin Protocol, and Ren to its potential listings.

Under its Digital Asset Framework, Coinbase has been evaluating potential digital assets and looking into the project’s security and compliance before moving forward with new cryptocurrency adoption. On the official Coinbase blog, the digital platform wrote:

“Our decision to support any asset requires significant technical and compliance review and may be subject to regulatory approval in some jurisdictions. As per our listing process, we will add new assets on a jurisdiction-by-jurisdiction basis, subject to applicable review and authorizations.”

KuCoin Loses $150 Million Due to Security Breach But Compensation to Follow

KuCoin, a Singapore-based crypto exchange, has disclosed the suspicious withdrawal of large amounts of Bitcoin, ERC-20, and Ether from its hot wallets worth about $150 million. Nevertheless, the security breach did not affect its cold wallets as they remained unharmed and safe.

Abnormalities detected

The crypto exchange revealed that its internal risk-monitoring system raised the red flag after noticing abnormalities on September 26. More alerts about abnormal transfers from its hot wallets kept trickling in, and this was a clear indication that something was amiss. As per the announcement:

“According to the latest internal security audit report, part of Bitcoin, ERC-20 and other tokens in KuCoin’s hot wallets were transferred out of the exchange, which contained few parts of our total assets holdings.”

On the other hand, users had started complaining about difficulties withdrawing their assets from the crypto exchange across various social media platforms. Nevertheless, they were assured that their funds were safe.

Insurance fund compensation

In a subsequent live stream, Johnny Lyu, KuCoin CEO, asserted that the company’s insurance fund could entirely cover the hacked funds. He also noted that the lost investments were nothing to worry about because they represented a small part of the firm’s total assets holdings.

Lyu confessed that at least one hacker stole its hot wallets’ private keys, but this was not the case with the cold wallets as they are not connected to the internet. KuCoin was also in touch with the authorities to help with investigations.

The company did not stop there because it contacted other crypto exchanges like Huobi Global, BitMex, OKEx, Binance, and Bitfinex to assist with inquiries by flagging down the hackers’ wallet address.

According to leading blockchain tracking and analytics provider Whale Alert, scammers have been on a stealing spree as they have made away with Bitcoin worth $24 million in the first half of 2020.

Image source: Unsplash

What is Crypto Arbitrage? Trading on Crypto Pricing Imbalances of Exchanges

Arbitrage is a term used to describe a profit-earning trading method that takes advantage of imbalances in prices between markets. Cryptocurrency and Bitcoin (BTC) arbitrage similarly take advantage of pricing differences in digital assets on crypto exchanges.

Crypto arbitrage exploits the fact that cryptocurrencies can have significant price differences depending on the exchanges that sell them. In simple terms, crypto arbitrage occurs when an asset like Bitcoin is simultaneously bought and sold in two markets—the same asset bought for a lower price on one exchange and sold for a higher price on another to profit on the price variance.

Cryptocurrency and Bitcoin Arbitrage: An Overview

Bitcoin and cryptocurrency trading are huge, with billions of dollars worth of crypto being transacted in millions of trades. There are dozens of exchanges now operating globally that provide crypto services. However, there can be significant differences comparatively on exchanges for the prices of digital currencies listed—making the crypto industry ripe for arbitrage.

Arbitrage traders take advantage of the price differences on exchanges and play these variances off each other to make a profit. For example, an exchange like Binance may list Bitcoin for $15,200 while Kraken lists the BTC for $15,000 at the same time. An arbitrageur will buy the lower Kraken price and sell on Binance to make a quick profit of $200. This is called spatial arbitrage.

Sounds easy, but of course there is more to it than that otherwise, we would all be rich. Bitcoin arbitrage, in particular, was far easier in its early years, as the price of BTC would fluctuate wildly from exchange to exchange, with much wider price gaps for traders to exploit. In crypto arbitrage, it is all about speed. The example above is quite exaggerated and such a clear gap in price is unusual, however, given the extent of decentralization in the crypto sector, such discrepancies can happen very frequently.

The smaller price gaps between that do exist do not last very long. Arbitrageurs need to be quick to take advantage of these gaps which creates the risk, but if timed correctly, the profits can be huge.

BTC Price variance between exchanges: Source – Coinrankings.com

A recent example where crypto arbitrage was rampant occurred when Filecoin was first launched on exchanges in October 2020. The discrepancy in price was massive—the price of a single Filecoin (Fil) on exchanges varied with Fil on Uniswap trading at $25.56, and Gemini exchange pricing Fil at $29. Although it is not relevant to arbitrage, even popular crypto price aggregators had little consensus on the price of Filecoin and Fil was $68 according to CoinMarketCap while competitor CoinGecko had priced Fil at $29.

Types of Crypto Arbitrage

There are three main types of crypto arbitrage—the first is called spatial arbitrage, which is the most common and takes advantage of the price imbalances of exchanges and we have discussed this in the previous section.

The other two methods are cross-border arbitrage and statistical arbitrage.

Cross-border arbitrage is similar to spatial arbitrage with the key difference being that the two exchanges being played off one another are in different countries. Arbitrageurs often have difficulty in executing cross-border arbitrage as the countries that put a higher premium on some assets are usually able to do so as the users cannot access outside markets, which means it may be difficult to move assets between these markets.

Statistical arbitrage is the most sophisticated method but also carries the most risk and is heavily reliant on speed and is based on mathematical modeling. This technique employed by crypto arbitrageurs involves using trading bots and algorithms that capitalize on pricing discrepancies that may only exist for the briefest moment.

Triangular Arbitrage

As any two cryptos can be trading pairs, any other crypto can be a medium of exchange. This type of arbitrage is called Triangular arbitrage.

Triangular cryptocurrency arbitrage is a popular method that allows the trader to remain on one exchange and avoid and exchange withdrawal fees or delays in transfer.

The crypto arbitrageur takes three different cryptocurrencies after identifying that one or more of these currencies is undervalued. A trader may see an opportunity involving Bitcoin, XRP, and ADA and would trade his BTC for XRP, then in turn use the XRP to buy ADA and then use the ADA to buy back the BTC. If they were able to effectively leverage one or more undervalued cryptos in the triangle, they should end up with more BTC than when they began.

The main advantage is that in all triangular trades, a trader gets a riskless profit as soon as the second trade is fulfilled. However, it should be noted that this type of arbitrage is rare and is definitely not easy—which is why modern crypto and Bitcoin arbitrage traders prefer using bots and software. Also, triangular arbitrage needs to consider risky price fluctuations of the crypto as the exchange medium.

Arbitrage Opportunity Extension—Bots and Tools

As mentioned, Bitcoin and cryptocurrency arbitrage are all about speed, and price spreads may only exist for an incredibly short period of time. To execute cryptocurrency arbitrage effectively, a trader will have to be able to compare all prices in real-time across exchanges to configure and submit their trade before the gap disappears.

As volatility subsides and the crypto market reaches greater maturity, attempting to trade in these gaps manually in 2020 and make a profit is near impossible.

With time, arbitrage now evolves into a mature way of profit with complex arbitrage algorithms and tools.

Besides searching for arbitrage opportunities by relying on experience, veteran traders also now commonly leverage Bitcoin arbitrage tools with which, they can set different arbitrage parameters and these rules will be triggered automatically when the requirements are met.

Arbitrage Market in Decentralized Exchanges (DEX)

Compared to centralized exchanges, there are significant differences in price models and pricing mechanisms in DEXs. Most DEXs use automated market makers (AMM) instead of the traditional order book model.

The pricing mechanism of AMM is different as well. Take the leading DEX Uniswap as an example, it uses Constant Product Formula (CPF) to determine the price and price changes.

The new DEX price model and pricing mechanism bring new opportunities for arbitrage as well as new complexities. But in essence, all arbitrages are based on the price difference of any given crypto.

Actually, arbitrage is encouraged in decentralized exchanges to make its price system more stable. In Uniswap V2, the DEX introduced flash swaps that allow users to withdraw up to the full reserves of any ERC20 token on Uniswap and execute arbitrary logic at no upfront cost. These flash swaps obviate upfront capital requirements and unnecessary order-of-operations constraints for multi-step transactions involving.

Uniswap also encourages the use of trading bots. These crypto arbitrage bots seek profits by comparing prices across different platforms to find an edge in value and execute the trade quickly.

As most decentralized exchanges are based on Ethereum, there are no direct non-Ethereum arbitrage opportunities. But there are wrapped tokens. Wrapped Bitcoin (WBTC) is an example that reserves the power of Bitcoin while inheriting the flexibility of an ERC20 token and which is backed 1:1 with Bitcoin 100% and verifiable.

Is Crypto Arbitrage Legal and Worthwhile?

Crypto arbitrage opportunities arise from exploiting mispricing between exchanges, but the practice is completely legal. So why doesn’t everyone do it?

There are many factors to consider for crypto arbitrage, for instance, exchange platforms used will normally charge fees for transactions and often withdrawal fees. As the gaps necessary for profit are so small, failing to factor in these fees by traders could see a loss of profit.

Time is of the essence and another concern with exchanges can be delays that can be associated with executing withdrawals. Crypto arbitrageurs have a limited time frame to get funds from one platform to another, a delayed transfer could cost the trader all expected profits.

Other factors that need to be considered are regulatory—particularly for cross-border arbitrage as there are different KYC and AML compliances for different jurisdictions.

Crypto arbitrage is not for new and inexperienced traders and those who have plenty of experience in the marketplace are known to have higher levels of success. New traders may see the possibility of capitalizing on a price inconsistency but often fail to consider the myriad of factors above—fees, regulation, and timing.

KuCoin Exchange Restores All Token Deposit and Withdrawal Services Following Massive Hack

KuCoin announced yesterday that the withdrawal and deposit services for all tokens will finally be resumed on the crypto exchange.

The Singapore-based digital asset platform suffered what was considered one of the biggest hacks in cryptocurrency history back in September, losing more than $150 million worth of Bitcoin, ERC-20 tokens, and Ether stored in hot wallets. The huge security breach was a result of a stolen private key.

Following the attack, many other cryptocurrency exchanges froze large amounts of Tether to prevent the hackers from liquidating and swapping their funds. KuCoin also took matters into its own hands by dumping old hot wallet addresses. It then secured the remaining funds by transferring assets into new hot wallets. KuCoin also froze deposits and withdrawals on the exchange. Nevertheless, the hack was a huge blow for KuCoin.

Currently, it is undergoing judicial proceedings for some tokens. For the affected cryptocurrencies, daily withdrawal limits will be implemented. To make up for this, the trading fees will be waived for the tokens in question. The “zero fee rule” will last until the withdrawal limit is lifted.

KuCoin crypto exchange seems to be undergoing a lot of revamping, as its official Twitter account is also “temporarily restricted” at the time of writing, indicating that there has been “unusual activity” on the account, according to Twitter.

For the lost funds, KuCoin CEO Johnny Lyu had previously assured all customers that it was going to be taken care of. He said that the company’s insurance fund will cover the hacked funds.

Is financial theft easier to trace with crypto?

Although the crypto firm has managed to recover 84% of the digital assets affected by the KuCoin hack, scammers have still been known to be on the move lately in an attempt to convert their stolen funds. Over 2 million worth of stolen crypto was reported by Blockchain.news to have been transferred to an unknown wallet on November 5.

However, since the stolen crypto assets run on the Ethereum blockchain, the hackers’ digital transactions could be traced by on-chain analytics.

With the rise of crypto adoption overtaking the financial world, an advantage of digital assets running on blockchain technologies may be that compared to traditional fiat, financial crypto theft may be easier to trace. The advantages of crypto transactions are that they have a digital footprint, for the most part, are permanently stored on nodes, and can be retraced by law enforcement in that manner.

Financial theft that can otherwise take years to track can therefore be pursued and resolved by law enforcement in a matter of weeks or months, as evidenced by the infamous Twitter hack for Bitcoins that happened this year. It only took three months for authorities to clamp down on the culprits.