Crypto Exchanges Prone Security Measures Contributing to Major Hacks

News / 20.12.2019

Crypto investors highly depend on crypto exchanges due to their liquidity, convenience, and provision of trading pairs. Cryptocurrency exchanges convert digital coins and are custodians and lenders through the provision of funds for margin trading.

Even though crypto exchanges offer convenience, security remains a concern. Traders entrust their funds to these platforms using hot and cold wallets. Nevertheless, hacking threats in crypto exchanges are extreme.

A large number of cryptocurrencies are genuinely secure because they depend on distributed ledger technology (DLT). Nevertheless, the challenge has to do with holding private keys as digital wallets exceed a blockchain’s horizon. Regardless of the evolution of the security of big cryptocurrency exchanges, a few inadequacies remain. 

A Look into Hacked Crypto Exchanges

Some of the top leading crypto exchanges that got hacked include, Binance, Bithumb, Coincheck, and the South Korean Upbit. In November 2019, Upbit reported the loss of 342 000 Ether in a hack. The attack led to the suspension of every activity for about two weeks. 

The periodic withdrawal took place during cryptocurrency funds from hot to cold wallets due to security purposes. The report by CipherTrace for the third quarter of 2019 maintained that the value of losses of cryptocurrencies from fraud and theft amounted to 4.4 billion USD.

Tactics Used to Attack

Social engineering, DDOs attacks, and malicious code injection via malware are the most common kinds of exchanges. Specific attacks could also be due to an inside job.

In social engineering, phishing is the most common kind of attack. Phishing involves tricking the cryptocurrency holders into believing that they are genuine cryptocurrency services. In such cases, victims are unaware that they are giving out their data and private keys to hackers. The malicious efforts to DDOs attacks are towards attacking the server or network of cryptocurrency exchange by directing it with massive internet traffic.

HitBTC; One of the Few Crypto Exchanges with Infallible Security Measures

HitBTC is one of those crypto exchanges that can boast about hackers’ inability to jeopardize their operations since their foundation. This crypto exchange got established in 2013 and is one of the oldest platforms of this kind. 

HitBTC uses sophisticated encryption technology and depends on cold storage as it motivates its users to activate the two-factor authentication and whitelist withdrawals. The firm uses such approaches to establish intense security.

HitBTC also clarified that attackers always try to attack it but to no avail. The firm said that many scammers are trying to impersonate their employees and steal funds from their traders. It shows that every cryptocurrency exchange is susceptible to likely hacking attacks, and there are no ways to avoid such.

DeFi exchanges said that there is no point of attack on their platforms because they do not hold the users’ funds. Staying in a secure blockchain network thus makes it difficult for hackers to have their way.

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Dacosta Osei-Tutu, a first degree holder in Nursing, who couples his Nursing career with blockchain blogging, has a great passion for the blockchain technology and aims to play a vital role in applying this revolutionary technology to disrupt the healthcare system in Africa.