Recently, Reuters reported that hackers accessed the accounts of more than 6,000 Coinbase customers. The company sent a letter notifying users of the breach, which occurred earlier this year, between March and May. Functionally, hackers utilized a flawed SMS account recovery process to gain access to accounts and then transfer assets into external cryptocurrency wallets. The company said that they fixed the issue and that they are working with customers to reimburse them for funds lost.
“This is one of those situations which is better than it could have been, but, still, is a scary proposition for most investors,” opined Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges. “To the exchange’s credit, they’re working to make the situation right. However, it should set off alarms for folks that, no matter how big the exchange, security should always be top priority. Just because you’re utilizing a well-known exchange, that does not mean that you can’t fall victim to a hack.”
“Cryptocurrency investing is different from putting money into a savings account. Choosing a digital asset exchange is different from choosing a bank. The quality of the technology is just so much more important here. If you work with an old-school bank which doesn’t have a mobile banking component, your money’s security isn’t at risk. It may be annoying. But, at the end of the day, your money is safe and backed by the FDIC. Cryptocurrencies are a completely different kind of asset class. It makes the security apparatus and the technology stack utilized by your crypto exchange among the most important aspects of selecting an exchange,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“When you’re evaluating your options, you really need to dig deep. Check out what kind of security protocols are in place, as well as the kinds of technology they utilize to make sure that your assets are safe. As bureaucracy begins to catch up with technology, there should be a more comprehensive and robust set of compliance requirements. However, until that time comes, it is up to each individual exchange to do everything they can to safeguard their exchange. With so many exchanges cutting corners in order to get to market quickly, it can be a daunting task to select one with which you can feel comfortable. I think, with the coming crypto boom, we’re very likely to see many new exchanges which differentiate themselves based on the technology they use and the security they have in place. If you think about it, there’s really never been a better time to launch a cryptocurrency exchange,” stated Gardner.
