Kyrgyzstan’s Four Dragons Exchange Reveals Hack Details

Representatives of the Kyrgyz cryptocurrency exchange Four Dragons, which suffered a hack in late February, have disclosed some details of the incident investigation to ForkLog.

According to them, unknown individuals stole USDT from the platform’s hot wallet during a major transaction. Four Dragons declined to disclose the amount of the loss, citing the confidentiality of the investigation.

Previously, external experts estimated the damage to be between $841,000 and $100 million. However, a source at the exchange stated that the maximum estimate is exaggerated.

During the internal investigation, the team managed to trace the movement of the funds. Initially, the entire amount in USDT was sent to a single address. It was then split into several parts and distributed to different addresses.

Four Dragons representatives stated that they contacted Tether Limited to request a freeze on the funds, but the company’s support “sabotaged the requests on formal grounds.”

“The perpetrators began converting the funds into other cryptocurrencies. A small portion went to platforms HTX, SWFT.pro, and others. The majority was sent to the WhiteBit exchange,” the source said.

He emphasized that it was thanks to WhiteBit’s cooperation that the subsequent movement of funds could be tracked.

After this, the assets were transferred through transit bitcoin wallets to the KuCoin exchange. According to Four Dragons, most of the stolen funds ended up there. The perpetrators conducted over 60 transactions in total.

Match Systems is involved in investigating the incident. Four Dragons has taken steps to label the tracked funds as stolen across all major blockchain analyzers, including Coinfirm, Chainanlysis, Crystal Blockchain, and Scorechain.

“KuCoin did not provide any assistance in freezing or even further tracking the funds, despite them being labeled as stolen when transferred to wallets in the KuCoin cluster,” Four Dragons representatives stated.

They sought comment from KuCoin, as they said, “the situation seems at least strange.”

In turn, ForkLog also sent an information request to the exchange but has not yet received a response.

Four Dragons is currently continuing the investigation in collaboration with Kyrgyzstan’s cyber police. They promise a reward of 10% of the recovered amount to anyone who helps locate the stolen funds under conditions of anonymity.

Simultaneously, the platform’s team is negotiating with producers about filming a documentary on the search for the stolen funds.

In July 2023, Four Dragons received a license to operate as a virtual asset exchange operator from Kyrgyzstan’s financial regulator.

On February 22, an unknown party hacked the platform. Despite this, the exchange continued its operations.