The past six months have been rough for the Crypto Industry with seven crypto exchanges witnessing large-scale hacking attacks costing them millions in the process. What’s staggering is that the first six months of 2019 has seen the same number of breaches as in the whole of the previous year, that too of large scale popular exchanges.
The latest one being GateHub.
The Story of GateHub
Based on reports by Cointelegraph on June 6, crypto exchange GateHub based primarily in the United Kingdom and Slovenia suffered a loss of nearly $10 million worth of XRP.
Following the Hack, GateHub said:
“Through a well-orchestrated attack, the perpetrator gained access to a database holding valid access tokens of our customers. We detected an increased volume of API calls (using these valid access tokens) coming from a small number of IP addresses.”
The exchange has asked their users to cooperate with their internal response team and other government authorities to analyze the breach and to identify the person or the group of people responsible for the breach.
The Role of Insurance
No matter how much security measures improve over the years, hackers have always found a way to bypass them and manipulate the system to meet their needs. This really highlights the importance of Insurance to ensure that no matter what happens, the users always get back their money.
Binance, for instance, has established the Secure Asset Fund for Users (SAFU) to compensate users in the unlikely event of a hacking attack. Here’s what they said about SAFU:
“Starting from 2018/07/14, we will allocate 10% of all trading fees received into SAFU to offer protection to our users and their funds in extreme cases. This fund will be stored in a separate cold wallet.”
Coinbase, on the other hand, maintains a reserve larger than its online storage with third-party insurance.
“Coinbase maintains commercial criminal insurance in an aggregate amount that is greater than the value of digital currency we maintain in online storage. Our insurance policy is made available through a combination of third-party insurance underwriters and Coinbase, who is a co-insurer under the policy.” (extracts from their insurance document)
Gemini has made use of insurance services of Aon and the Federal Deposit Insurance Corporation.
“Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions. Educating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry.” said Yusuf Hussain, Gemini’s head of risk
What Can Be Done?
A major way to compete with these hacks to improve communication between exchanges to compare and learn what went wrong to make sure that the same mistake doesn’t get repeated by another exchange.
In previous years, hackers targeted small exchanges that could not invest much on security measures.However, in the past six months, almost all the major crypto exchanges including the likes of Binance and Coinmama have all fallen victims to security breaches.
The Bithumb breach was suspected to be a inside job. Their post-breach report said:
“According to the company’s manual, Bithumb secured all the cryptocurrency from the detection time with a cold wallet and checked them by blocking deposit and withdrawal service. As a result of the internal inspection, it is judged that the incident is an ‘accident involving insiders’. Based on the facts, we are conducting intensive investigations with KISA, Cyber Police Agency and security companies.”
These exchanges are home to millions of users and if they can’t find a way to withstand these breaches who else can. With Blockchain on top of which Cryptocurrencies are built being marketed as the answer to security woes, reports like these doesn’t help the industry grow. Hopefully, these companies can find a fool-proof solution to these breaches.
Follow us on Twitter, Facebook, Steemit, and join our Telegram channel for the latest blockchain and cryptocurrency news