In a recent security audit by South Korean agencies, a shocking fact was revealed. Out of the 21 crypto exchanges that were inspected, two-thirds have failed the security tests. This poses a pertinent question on one of the most advanced crypto nations in the world over the security of its exchanges. This also puts under the spotlight the other seven exchanges that did “pass” the tests. But are they true and clean?
Details of the inspection
During September and December last year, the Ministry of Science and ICT, the Korea Internet & Security Agency and the Ministry of Economy and Finance scrutinized 21 crypto exchanges on the basis of 85 security aspects. Only seven exchanges - Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi Korea – were able to clear all the 85 tests. All other exchanges failed in multiple tests exposing their security apparatus and their utter failure to secure funds of thousands of traders who trust these platforms with their money.
What was shocking to note was that these exchanges did not have in place even basic PC and network security, which led to them failing the government tests. This is a terrifying situation because it opens up all of these exchanges to hacking attacks at all times.
It is even more surprising to see the nonchalant attitude of the majority of the crypto exchanges towards security even after the infamous hacking incidents of Coinrail and Bithumb where more than $70 million were collectively stolen by hackers.
Crypto exchanges have a history of being hacked
Crypto exchanges have been getting hacked since 2011 due to lax or indifferent security measures. Take the (in)famous cases of Bitcoin7 that lost 5000 bitcoins back in 2011; Bitcoinica, which was hacked thrice leading to a loss of more than 100,000 bitcoins; Mt. Gox (hacked twice) that lost more than 750,000 bitcoins; Bitstamp that lost almost 20,000 bitcoins; the DAO that lost $60 million of its funds and Bitfinex that lost 120,000 bitcoins.
More recent hacks have led to greater losses as hackers are becoming more patient in exploiting the security vulnerabilities of exchanges. Last year CoinCheck, a Japanese exchange lost $530 million while BitGrail, an Italian exchange lost $170 million in funds. Even Binance, the topmost crypto exchange in the world could not protect itself from hackers and lost almost $40 million.
Let us briefly dissect a couple of prominent cases. Mt. Gox was a tragedy waiting to happen The biggest crypto exchange was first hacked in 2011. At that time the hackers gained access to an Mt. Gox auditor’s PC which they used to manipulate bitcoin prices. They then gained access to keys of Mt. Gox customers since all funds were kept in hot wallets. The hackers then put up sell orders on all hacked accounts at throwaway prices and stole 2000 bitcoins in the process. Two years later, in what is termed as the biggest hack till date (in terms of bitcoins stolen), 850000 bitcoins were stolen from Mt. Gox. Even before the hack, there were murmurs of disheveled organizations run in an almost autocratic fashion with dismal security measures in place. There were lawsuits and cases against Mt. Gox and it was fighting on multiple fronts, leaving a door ajar only for the hackers to enter and make hay.
Fast forward to May 2019. Even after precious lessons from previous hacks, the world’s topmost crypto exchange, Binance was hacked and more than $40 million were stolen. While the amount is negligible given the size of Binance, it does leave a few questions unanswered. Binance revealed that hackers were able to get access to user’s API keys and two-factor authentication codes. The hacker also impacted Binance’s hot wallet to steal bitcoins. All of these facts create a chilling scene where it is almost impossible for users to trust the security features of crypto exchanges.
How BTCNEXT aims to resolve these issues?
BTCNEXT is a cryptocurrency exchange that takes security very seriously. With so many hacking incidents due to security lapses, it is easy to not repeat those same mistakes. And BTCNEXT has created a platform that builds on the learning of past scams and hacks. It puts the customer at the center of the ecosystem and offers all of its services such that the customers get the best crypto trading experience and extremely high levels of security for their funds.
All of BTCNEXT’s systems go through a series of rigorous internal multi-run audits and external audits. All of its servers are located in duly certified data centers and feature the full range of all required layers for digital and physical security. BTCNEXT also believes in providing excellent customer service for traders. With 100% transparency in all of their operations, transactions and communications with all stakeholders, BTCNEXT also provides 24/7 customer service with immediate response to solve any issues or problems that traders might face.
While the importance of cryptocurrency exchanges is increasing by each passing day, they are bogged down by lax security systems that are being easily exploited by hackers. Apart from hacks, exchanges are also indulging in reporting fake trading figures to attract unsuspecting customers on their platforms. There have also been problems with liquidity, compliance, and regulations. BTCNEXT is here to address all of these issues to create a system that adheres to all regulation and offer the next level of service and security.
BTCNEXT exchange is the next generation spot and margin-trading platform that has been developed by Platinum Q DAO Engineering, which has also brought USDQ and KRWQ to the market, looking to edge together innovative solutions in collateralization. They plan to achieve it by using stabilizing mechanisms and neural networks for high-endurance stable coins.
The one aspect of USDQ which makes it unique is that this stablecoin is decentralized. It has Bitcoin as a collateralized cryptocurrency debt backing up its value, instead of a centralized authority holding dollar bills, as in the case of Tether (USDT).
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.
CEO of Platinum