Five things you didn’t know about exchanges

Five lies to know about cryptocurrency exchanges. Exclusive research from BTCNEXT by Platinum Q DAO Engineering.

Many people don’t know, or just not aware of the fact, that the success of cryptocurrency disruption mainly lies in the development of high-quality digital exchanges. To date, according to CoinMarketCap statistics, there are over 250 platforms that support active trading, meanwhile only a year ago this number was slightly above 200. However, despite the large number, most of the options still have some aspects that most people do not know about. The following five facts should shed some light on what is going on behind the scenes and what to expect.

1. Security issues

Unlike traditional stock exchanges, virtual asset trading platforms have not registered under any state or federal securities or commodities laws. According to research provided by the state of New York’s Attorney General, “the vast majority of cryptocurrency exchanges have not implemented common standards for security, internal controls, market surveillance protocols, disclosures, or other investor and consumer protections.” It basically means that the customers of digital currency trading platforms face significant risks, such as hacking attacks, delays, and outages to withdraw money, deceptive and predatory practices, together with market manipulation, and insider abuses.

To prove this statement with a direct argument, it is just enough to recall the most recent hacking attacks:

  • 2016: Distributed Autonomous Organization - $60M stolen; ShapeShift - BTC 462 stolen; Bitfinex - BTC 120k; CoinTrader - BTC 81; GateCoin - BTC 250.
  • 2017: BTC-e, a Russian exchange was closed by FBI related to laundering of bitcoins stolen from Mt.Gox, the amount lost is not available; NiceHash, a Slovenian service, $77M lost; Tether, $77M; Parity, a wallet, $310M; CoinDash, $7M; Yapizon, BTC 3,816.
  • 2018: CoinCheck, a Japanese exchange, $530M stolen; BitGrail, an Italian exchange, $170M; BlackWallet $400k.
  • 2019: Hackers stole $41 million worth of bitcoin from Binance cryptocurrency exchange, using a variety of techniques, including phishing, viruses, and other attacks.

2. Lies

Even the biggest cryptocurrency exchanges do not hesitate telling lies to their users. Despite the fact that Binance was mentioned in the previous section as hacked, traces indicate that it was all planned and the public ate it up. One of the reasons is that very few people really understand how wallets and API-trading actually work. The official version of “the hackers that had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time,” together with the promise of using Binance emergency insurance funds to compensate all the possible losses, sound too tricky.

Curiously, just almost exactly one year ago Binance faced the same issue, promising to reset its API keys following the incident. To be more precise, its users reported 7,000 BTC were moved out of the exchange. One of the crypto enthusiasts found it suspicious and decided to conduct some sort of investigation.

He discovered that “Funds were sent to 1CQFNdCsDvZgB62eYLgS5q4eNZkZDuhUev as part of the illicit extraction of funds from the exchange, but those funds were then sent back to Binance's hot wallet directly (which is very abnormal). It is abnormal for anyone to send to Binance's hot wallet directly because Binance's hot wallet is the address where all of the *deposit addresses* are scraped into.”

Finally, he came to the firm conclusion that the funds that were sent to the bech32 addresses (prefix 'bc1') are NOT SPENDABLE. The story could have ended there but Confirm discovered that At 4:11 AM on May 8 the hacker or hackers moved 1214 BTC ($7.16 million) to new addresses and then moved another 1337 “to 2 new addresses held by the hacker.” By breaking the transactions up into smaller and smaller amounts, hackers are trying to make it more difficult to track their traces. In any case, all of that is just too suspicious. It is very likely that the “second hit” from “SYSBTC hackers in 2018” is being played out in front of us. That is all a show, a withdrawal of attention from something special, and a reason to block the input and output of funds for one week.

3. Manipulation

Bank of England Prudential Conduct Authority in its letter to CEOs claimed, “crypto-assets raise concerns related to misconduct and market integrity – many appear vulnerable to fraud and manipulation, as well as money-laundering and terrorist financing risks. Entering into activity related to crypto-assets may give also rise to reputational risks.” This statement is built around the fact that trading platforms without an effective system for verifying and monitoring the identity and location of customers cannot block unauthorized access or ensure the fairness and integrity of their marketplace.

4. Fake trading volume

According to a Bitwise Asset Management report aroximately 95% of the claimed trading volume is fake and/or non-economic in nature, and the real market for bitcoin is significantly smaller, more orderly, and more regulated than commonly understood.

Why would they exaggerate volume you may ask? Well, the answer is pretty simple - in crypto, the incentive to inflate volume is pernicious and strong: Exchanges that appear at the top of the lists used by leading media organizations can attract listing fees (often millions of dollars) from ICOs and altcoins.

5. Fake stable coins

The most famous Tether coin, also known as USDT, theoretically is a stable coin that has been created to conserve the value of $1. However, in reality, its price varies (sometimes significantly).

The reason lies in the fact that Tether is not fully backed by dollars. Tether’s website has publicly stated for years that “every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USDT is always equivalent to 1 USD,” but since recently the definition of its “stable coin” has changed.

The new version says: “Every Tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.”

Why did they disclose this information only now? It’s possible that Tether’s claims about backing were changed in response to a probe launched recently by the U.S. Justice Department.

Does it mean that there is no stable coin crypto community can actually trust? Platinum Q DAO Engineering developed fully backed stable coins: USDQ and KRWQ. Both currencies will be completely decentralized and trustworthy as their value will be pegged to the US Dollar and Korean won, in ratio 1:1. The volatility of the price will be controlled by an ingenious combination of market forces, economic incentives, and internal processes.

Why is BTCNEXT exchange the most convenient choice for cryptocurrency traders

After analyzing current market inefficiencies, BTCNEXT team concluded that industry needs a customer oriented cryptocurrency exchange that would be focused on ensuring the maximum value and enjoyment for their users. For that purpose, the developers decided to create a platform that may be used by anyone – from beginners to professional traders. In order to achieve it, they had to offer as many features as possible, without forgetting the importance of intuitive and user-friendly design. All of that may sound obvious but for some reason, no one, until today, has ever succeeded in completing such a “simple task”.

As for now, newcomers can benefit from the best customer support on the market. To be more precise, users have 24/7 access to customer support that looks forward to guaranteeing a smooth user experience and quick feedback and resolution of any support inquiry. Meanwhile, experienced traders can take advantage of services like SPOT Trading, Margin Trading, IEO Launchpad, and sophisticated trading instruments. Also, BTCNEXT’s dashboard includes wallet and escrow services.

The security is guaranteed by the employment of special risk control measures and strategies. Normally, security is strongly correlated with transparency. Unlike many other cryptocurrency exchanges, BTCNEXT doesn’t say or promise something that cannot be delivered or achieved. For example, the team doesn’t hide they are still working on launching the gateways for fiat deposit and withdrawal. They have also admitted seeking to assure full compliance with all laws and regulations in countries of operation, but due to the high cost, American and Chinese citizens should be aware of the possible risks.

BTCNEXT exchange is brought by PLATINUM Q DAO ENGINEERING, looking to edge together innovative solutions in collateralization. In a short period of time its team has been to achieve amazing results - become the best crypto consulting company in Asia and open their very own University of Blockchain and Investments ( No doubts, they are here to stay and help their clients to stand out from the competition!

In conclusion.

The cryptocurrency industry is still very young, therefore, it is far from being perfect. Only constant improvement and innovation will secure the survival of the recently emerged economic sector. All that blockchain companies really need to do is to accept that mistakes happen. However, it doesn’t mean that they must feel ok with making bugs all the time. Instead, they should learn from them and try to avoid them in the future.

BTCNEXT exchange is a cryptocurrency trading platform designed for the beginner and delivered by experts. In order to protect investors’ funds, BTCNEXT developers have implemented more than 300 security measures. In the near future, users will be able to trade over a hundred types of tokens including Bitcoin, Ethereum and Litecoin. For more information, visit their website and follow them on Twitter, Instagram, Telegram, Facebook, Medium, or LinkedIn.

Daria Volkova

Daria Volkova

Head of legal department in Platinum