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Is KuCoin Safe? What Beginners Should Know

Is KuCoin Safe? What Beginners Should Know
Jordan
Major
Updated: 12 Jul, 2021
14 mins read

In this guide

This guide will provide insight into the specifics of the KuCoin cryptocurrency exchange and discuss whether or not it is a safe crypto platform to use.  We will go through the security measures put in place by KuCoin to deter hackers and protect the network.

In addition, you will learn about the company’s core products, hack history, trustability, customer support, and Safeguard Program.

About KuCoin 

KuCoin, which launched in 2017, is a cryptocurrency exchange that has grown to become one of the world’s largest digital asset platforms by providing a wide range of trading pairs and cryptocurrency-related services. 

The platform was designed by the company’s founders, Michael Gan and Eric Don, to provide a safe and simple exchange for the global community to invest in and trade digital currency.

The notion behind the crypto trading company is to provide customers with virtual asset transaction and exchange services by integrating premium assets from around the world in conjunction with a cutting-edge transaction platform.

KuCoin Core products

KuCoin provides a variety of products and features, including a trading platform, an app for iOS and Android, Futures, Indexes, Margin Trading, and Lending Program to mention a few.

Trading platform

KuCoins founders built its trading platform from the ground up to help both new and experienced investors; it has a clean appearance, an easy-to-use interface, and many complicated functions and tools available, allowing traders to customize their KuCoin setup completely. 

Mobile app

Additionally, users can trade on the go with the exchange’s mobile trading app for iOS and Android. For instance, traders can easily navigate between Markets, Trading, Futures, and Assets with a single click, select an order type and pair, and effortlessly execute the transaction.

Futures

KuCoin Futures trading is available in two versions: one for beginners (light mode) and one for experienced traders (Pro mode). Users may trade contracts with coin margins with up to 100X leverage; to be specific, you can trade contracts worth up to $10,000 with as little as $100 in your account.

Margin

KuCoin offers Margin trading in 15 cryptocurrencies, including KCS, ETH, and BTC, which users may leverage for each of these trading pairs up to 10X. This service is appropriate for both short and long positions. Keep in mind that traders might boost their earnings by borrowing money; on the other hand, they may suffer a significant loss with their initial investment.

Indexes

KuCoin provides several indexes; the company’s idea is to take a weighted average of a specific cryptocurrency across many significant exchanges. KuCoin indexes are available across: Bitcoin, Ethereum, Litecoin, and XRP.

Lending Program

KuCoin’s lending program is an extra functionality; in this case, lending your digital money allows you to earn interest on your investment. The tokens will primarily be used to help fund margin accounts.

Trustability

Not only are markets impacted by hacks and scams, but customer demand for the virtual currency depreciates with lapses in security.

KuCoin proclaims to be used by one out of four crypto traders globally, making it susceptible to being a potential target to cyber attacks. Cryptocurrency exchanges ​​that are well known in the marketplace are considered more secure; thus, it is paramount that KuCoin establishes itself as one of the most high-profile, trustworthy platforms in the space.

On the topic of trustability, KuCoin seeks to safeguard user privacy and assets from infringement; for example, its security team has continually upgraded relevant processes and undertook periodic assessments. 

KuCoin employs a diverse set of security processes and protocols. On the operational side, the exchange has several control departments that continually monitor platform activities to maintain its security alongside dedicated risk control departments that enforce rigorous data usage regulations on a practical level.

All things considered, KuCoin is a prominent cryptocurrency exchange that offers a comprehensive trading platform filled with many cutting-edge products and features. However, if you want to learn more about the exchange and its array of products, be sure to read our in-depth KuCoin review.

Encryption

KuCoin exchange was built according to financial sector standards, thus offering bank-level asset and data encryption security to provide the safest possible environment for all transactions and account holders. Such as utilizing several security techniques, specifically micro-withdrawal wallets to safeguard your real-time withdrawals, multi-factor authentication, multilayer encryption, and a dedicated internal risk control department to ensure the safety of your investments.

Aside from that, most client funds are stored offline in cold wallets, with the remaining amounts held in hot wallets to guarantee that the platform can continue to provide near-instant and automatic withdrawals.

Licensing

Although no national licensing authorities regulate KuCoin, the exchange still has insurance coverage for its users and its own assets.  

In April 2020, KuCoin announced a strategic collaboration with Onchain Custodian, Singapore’s crypto-asset custody platform, to further strengthen the exchange’s security. Lockton, the world’s largest private insurance brokerage business, will back the custodial funds, while Onchain Custodian will provide a custody service for KuCoin cryptocurrency assets.

Since the regulatory position of digital tokens is vague or unresolved in many places, digital currencies may be classed as securities or subject to new restrictions by government bodies. In that respect, KuCoin may terminate or restrict such services in or from specific areas, depending on the changes in current laws, regulations, or norms.

Hack history 

KuCoin was the victim of a cyber attack in September 2020, resulting in $285 million siphoned from the exchange based on the market price at the time. 

Leaked private keys of a few KuCoin hot wallets were the primary cause of the incident. KuCoin was subjected to a sophisticated APT assault that significantly disrupted its internal network, allowing the attackers to circumvent the platform’s security system and steal the private keys of a few hot wallets. 

While initial estimates put the stolen amount at about $150 million, further evidence indicated that the actual figure was over $280 million. As a result, the KuCoin hack was the fourth-largest to date.

Below is a diagram illustrating the recovered funds from the breach.

The funds recovered from the KuCoin security incident. Source: KuCoin.com

Recovering the funds

Following contact with law enforcement, the firm made quick progress, identifying the culprits and recovering 84% of the cash in less than two months.

A collaboration between KuCoin, its partners, and other cryptocurrency exchanges allowed the firm to recover 78% of the losses—equivalent to $222 million—while cooperation with law enforcement allowed the company to recover an additional 6%, or $17.45 million. The platform’s insurance policy then covered the remaining 16% ($44.55 million), according to KuCoin CEO Johnny Lyu.

On the grounds of this incident, the exchange has assured that no user will suffer a loss, and KuCoin has significantly improved its security mechanisms following the hack.

Digital assets are held in hot wallets on a platform that you have no control over; hence, you must acknowledge the dangers connected with keeping a significant amount of your funds on any crypto exchange, for that matter.

KuCoin’s response to the security incident

Following the breach, KuCoin took an honest and responsible approach to keep users informed about the problem via YouTube live broadcasts, in tandem with working on the following three fronts:

  1. Wallet security upgrade: KuCoin promptly discontinued the prior hot wallet, re-deployed the wallet system, and updated the risk control procedure for the wallet. 
  1. Recover stolen funds: KuCoin immediately contacted exchanges, projects, and wallet partners to retrieve the stolen funds.
  1. Tracked suspects: KuCoin collaborated with law enforcement and security agencies to hunt down the suspects.

Thus, KuCoin promptly addressed the associated vulnerabilities and re-deployed all hot wallets following the event.

Subsequently, the following three components of KuCoin’s new security system were redesigned:

  1. Upgrade to the security system: To protect the safety of traders’ accounts and assets, a more robust risk management system has been introduced to the three access systems of WEB, APP, and API.
  1. Network security architecture system upgrade: To deploy network security measures in strict line with financial-level security compliance standards, KuCoin contacted one of the Big Four accounting firms. The exchange confirmed it would get its security standard certification.
  1. Restructuring of the KuCoin security team: KuCoin restructured its security team and established strong links with leading security and anti-APT agencies. Simultaneously, the KuCoin Information Security Emergency Response Center, an open and transparent center, will be shown. The center will provide the industry with the most powerful, swift, and effective response to future security threats.

Key Security Measures

I.D. verification

To enhance the safety and security of customer funds on the exchange, KuCoin introduced a Know Your Customer (KYC) procedure in November 2018. To prevent the occurrence of fraud, money laundering, and other harmful actions on KuCoin, users are asked to enter personal information in compliance with virtual currency industry norms as indicated in the User Identity Authentication Statement.

KYC Verification. Source: KuCoin.com

KYC certified accounts are eligible for a higher daily withdrawal limit if they opt to complete KYC1 and KYC2 verification; customers with the highest levels of verification are able to withdraw up to 3000 BTC a day. 

The features of ‘unverified’ status on KuCoin’s website. Source: KuCoin.com

In the case of illegal access by third parties as a consequence of the leaking of personal information or the loss of credentials by a customer, completing the KYC procedure entirely can assist the user in regaining access to their account more swiftly.

As a result, traders should take active steps in protecting and securing their assets from possible breaches or attacks. 

To learn more about the ins and outs of the verification process, be sure to look at our detailed KuCoin KYC guide.

2-Factor authentication (2FA)

To better protect and secure your account, KuCoin recommends using 2-factor authentication. Specifically, the platform uses Google Authenticator to safeguard your account, prevent asset theft, and provide an extra layer of security.

Google Authenticator, which requires you to input a code from your mobile on the KuCoin website or app before you can log in or make a trade. 

This additional security feature ensures that even if someone discovers your password, they would not be able to access your account without gaining access to your mobile phone.

What is more, users can also add additional security measures to their accounts by configuring any of the methods listed below:

  • Phrase for anti-phishing protection;
  • Login security phrase;
  • Security questions; 
  • A password for trading;
  • Phone verification;
  • Email notifications;
  • IP login restriction (recommended when keeping at least 0.1 BTC).
Security Settings. Source: KuCoin.com

We recommend you take the time to set up some if not all of these safeguards to secure your account. However, it is always a smart strategy to withdraw any unused funds from the exchange and place them in your own wallet, ideally a cold storage hardware wallet such as a Ledger or Trezor device.

Please see here for a detailed step-by-step explanation of how to bind Google 2FA, as well as any further difficulties relating to incorrect or missing codes or changed phones.

Additional security features

KuCoin now has over 8 million registered users in over 100 countries; meanwhile, the platform continues to gain the trust of many others by keeping an eye on trade security and devoting significant resources to implementing new safety measures.

As an illustration, the KuCoin team routinely checks to see if groups follow stringent security requirements in their day-to-day data activities. Along with dividing funds into multiple accounts for users, APIs that access your KuCoin account (if you want to set them up and utilize them) will only have access to the accounts you specify.

Trading password

Changing Trading Password. Source:KuCoin.com

To secure your account and digital assets, the exchange has implemented a trading password as a new function. Users may establish a unique trade password, which they can then use to validate platform transactions, withdraw money, build APIs, and conduct other activities.

Change Trading Password Confirmation. Source: KuCoin.com

KuCoin Safeguard Program

The “Safeguard Program” where security breeds prosperity is a crypto asset and industry security alliance dedicated to offering complete protection and support to people and institutions harmed by “security incidents.” This includes, but is not limited to, technical help, evidence archiving, asset confirmation, and providing preferred policy.

The ultimate objective is to coordinate the might of the crypto community to fight cybercrime by giving security, legal, and asset recovery help.

Project support

KuCoin guarantees the following in exchange for the partners’ help in the incident: 

1. KuCoin will provide marketing and branding assistance to contribute to the project’s long-term development; 

2. KuCoin will assist in the organization of campaigns and activities that are suited to each project;

3. KuCoin will actively participate in the ecosystem growth of each project;

4. KuCoin will strengthen mutual collaboration and integration between both sides.

Presently 35 projects support KuCoin in addition to 5 institutions.

Safeguarding its users: KuCoin guarantees that if any user asset is harmed due to this occurrence, it will be fully compensated by KuCoin and its insurance fund. 

KuCoin Customer support

KuCoin wants to protect user privacy and assets from infringement; therefore, its security team has created a security notice to safeguard personal information and accounts, so it’s always a good idea to check here first as you may find a solution to your problem.

Note: However, in the unlikely event that you suspect your account or registered email address is being hacked, please contact online support immediately, and KuCoin will instantly freeze your account. Once your account is completely safe, you may apply to unfreeze it yourself via the login page or contact customer support if it was frozen manually.

Moreover, there is a Help Center and a FAQ page for online resources, and these should be your first port of call for any inquiries regarding the platform and how to use various features. 

KuCoin Help Center. Source: KuCoin.com

On the assumption that the variety of online materials cannot address your issue, there are several methods to contact the support team.

KuCoin has a dedicated customer support staff that is available 24 hours a day, 7 days a week via the following channels:

  • Online chat;
  • Ticketing system;
  • Mobile app support.

Likewise, there are also a variety of social media channels from which to choose. If you use these avenues, keep in mind that the community may respond to your query faster than the official support staff.

Overall, the company’s customer service is responsive and will answer your questions promptly.

Verdict

KuCoin is regarded as one of the most trustworthy cryptocurrency exchanges on the market, a worldwide platform that adheres to the numerous regulatory frameworks from nations all over the world. Forward-thinking and innovative, the exchange has seen considerable development since its launch in 2017.

Currently, the platform is among the crypto space’s top players regarding security, dependability, service quality, and features. Well-known for its user-friendly trading interfaces on desktop and mobile, the exchange is ideal for both new and experienced traders looking for exposure to well-known as well as lesser-known small-cap crypto assets and tokens.

With its sophisticated API, KuCoin has succeeded in making trading fun, transparent, and engaging. It is a relatively new trading platform in an industry that is rapidly expanding. 

In the September 2020 security incident, KuCoin responded as soon as the situation arose before it became too complex to resolve. KuCoin and its insurance covered any user affected by the incident. The CEO believes that today’s company is more robust than it has ever been, and the firm will continue to increase its investment in security.

By way of explanation, it presently serves around eight million users, giving prominence to its credibility and trustworthiness. It is trusted by one out of every four cryptocurrency holders worldwide.

KuCoin exchange, in our opinion, is a safe and secure trading platform; it’s one of the most liquid marketplaces with billions of dollars in daily trading activity, allowing traders from all over the globe to swap digital currency assets quickly and inexpensively.

To stay up to date with recent developments on all of KuCoin’s happenings regarding their platform, be sure to join their social channels: Facebook, Twitter, Instagram, and LinkedIn.

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Jordan Major
Author

Jordan is an investor and market analyst. He's passionate about stocks, ETFs, blockchain, and digital assets. At Finbold.com, he delves into the technicalities to obtain future trends for new market traders and gives insights into user-friendly platforms for beginners.