Token Projects to Recover $130M from the Kucoin Hack, Devs Condemned for Centralization

The cryptocurrency community has been discussing the Kucoin hack as a great number of ERC20 projects have frozen, paused, or reversed their smart contracts after the hack. Estimates say that at least $129 million ERC20 tokens affected are considered “safe” from the hacker’s clutches. Additionally, evaluations show the breach may be much larger than originally estimated, as one report says the compromise saw $280 million stolen.

The Kucoin hack has been the talk of the town in crypto land these days, as the exchange was hacked on September 25, 2020. News.Bitcoin.com reported on the initial losses estimated to be around $150 million, the day after calculations were up to $200 million. Today, another analyst has stated that the hacker likely stole nearly $280 million during the Kucoin breach.

“So I did some accounting of the Kucoin hack based on the wallets very likely associated and based on my estimation, there was nearly $280 million of assets stolen, not $150M,” said Larry Cermak the Director of Research at the Block Crypto on Monday morning. “This would make it the third-largest hack in history and [seven] times larger than the Binance hack last year,” Cermak added.

One of the biggest conversations this weekend on social media and crypto forums was mostly about ERC20 projects that had figured out ways to reverse the hack or freeze the funds stolen.

News.Bitcoin.com already reported on the frozen tether (USDT) for $22 million worth of stablecoins from the ETH and EOS chain. Additionally, the Ocean Protocol paused the project’s smart contract as well when the hacker started dumping 10k batches of the Ocean token on Uniswap.

But a bunch more ERC20 projects either restarted, froze, or paused their protocols in order to save the tokens from the hacker’s dumping.

Other token projects that participated in the ‘$129 million re-boot’ included Kardiachain ($9M), VIDT Datalink ($7M), Velo Labs ($76M), Orion Protocol ($8.5M), Aleph token ($510k), Covest ($520k), NOIA Network ($5M) and more. The projects have since been criticized for not being decentralized and executing rollback not seen since the 2017 DAO hack.

“History doesn’t repeat but it does rhyme,” tweeted Jameson Lopp after the ERC20 rollbacks and freezes were revealed. “Fascinating to see how rollbacks have evolved since The DAO.”

The software developer added:

If a ‘decentralized’ project can invalidate stolen tokens then it can invalidate YOUR tokens. Censorship resistance for all or censorship resistance for no one.

It’s also been said that the Kucoin exchange is working directly with the ERC20 project developers. People visiting the exchange’s Telegram channel mentioned that 2 million USDT issued by Tron and Omni Layer was also frozen. Another blockchain project called Akropolis paused all AKRO transfers after the Kucoin hack as well. Estimates say that at least between 50-65% of the Kucoin hacked coins will be recovered due to centralized decision making.