Fraud and Scams, News & Updates

SNX Founder talks about Recent Kucoin Hack

In the previous week, a famous Singapore-based exchange known for an extensive offering of altcoins, KuCoin, has been through jeopardy.

The Blockchain analysts have recorded a series of suspicious extractions from the company’s hot wallets, suggesting that the crypto exchange was hacked. Mainly eight hours after the withdrawals, it has been revealed that a hack had happened, in which millions were lost in Ethereum, ERC-20 tokens, Bitcoin, EOS, and other crypto-assets. Summing it up, it is reported that the amount stolen was close to $200M, most of it was in ETH and ERC-20 tokens.

Countless “decentralized” crypto projects have appeared to take action: others have forked their protocol to seize the hacker; some have locked the tokens to the hacker’s address.

However, some projects did not act.

Synthetix was one project that allowed the hacker to sell his coins, one of the most prominent DeFi projects carrying $600M worth of cryptocurrencies that was locked in the contracts.

Kain Warwick, Synthetix’s founder, has commented about the situation in a lengthy Twitter thread, elaborating his thoughts on the condition.

Don’t leave savings on exchanges.

Warwick’s first takeaway was that if the funds are left on the exchanges, the responsibility is on the user. He commented it with the admonition that he has some SNX on the exchange to fund the certain operations for the protocol:

“Turns out I had some SNX sitting on there from about six months ago… So I write this SNX off immediately if you have funds on an exchange and it gets hacked, it is on you… I really cannot stress this point enough. If you leave funds idle on an exchange for like six months and forget they are there, you deserve to lose them. It is like leaving an envelope of cash on your doorstep for months.”

The DeFi founder persisted that funds shall only be on exchanges if the user has a valid reason.

Forking the protocol to save the SNX will be a senseless move.

Warwick also stated that the attempt to fork the protocol to lock or save the funds of the stolen SNX would be simultaneously challenging to do and senseless.

“So back to the hacked SNX, it was less than half a percent of the supply. So my immediate response was there is zero chance we are getting a SIP to pass to fork the protocol or something equally dumb. And that was the end of it for me.”

Warwick also continued that he would have personally voted against a Synthetix Improvement Proposal when one was proposed and presumably due to the problems it may cause and how that will damage the use of the word “DeFi.”

Also, when the hacker had deserted a bulk of his SNX, it was rapidly bought up by “smart actors” looking to hoard the cryptocurrency over a long term; this means that it did not kill the Synthetix protocol or any associated projects:

“The other consideration is that SNX liquidity as not what it was in the @teo_leibowitz era. SNX is on multiple DEXs and CEXs with significant liquidity. I had no concerns about the impact on the token if they were dumped. I figured smart actors would use it for accumulation.”

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