Fortune highlighted a sixteen month, $10.5 million saga, with human error and crypto.com standing front and center. Instead of a $100 refund to an Australian customer, Crypto.com sent the woman in question $10.5 million, typing her account number into the amount section of the transfer. It took the company over six months to realize the mistake. That was last December, and they still have not recovered the money.
“This incident illustrates perfectly how the crypto industry is plagued with human error. Much of it can be attributed to a failure to implement best practices. We see it in exchanges, we see it with custodians. Because the industry has been stuck in a regulatory gray area, further fragmented by geographic jurisdictional splits, it never has really operated with the kinds of scrutiny that other industries demand,” explained 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.
“For example, if we were talking about the traditional finance industry, regulators would’ve long ago cracked down on open-source development of exchanges, which are a major contributor to hacks. Imagine if your online stock brokerage was hacked for nine figures because it ran on open-source code. Now imagine that brokerages were hacked on a monthly basis? On a weekly basis? Sometimes, on a daily basis?” asked Gardner.
“It wouldn’t be long before the regulators would step in and create guidelines. The crypto industry isn’t there yet, but I think we’re getting closer. First, regulators are going to focus on putting a halt to any opportunities for money laundering and pump-and-dumps, but, after that, I think they’re going to have to tackle the elephant in the room: security,” 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. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, 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.
“Sooner or later, though — and I’m banking on sooner — the regulators are going to need to tackle security. That includes cybersecurity concerns, like open-source development. It includes code audits. It includes best practices to keep employees from falling victim to phishing attacks. It includes stopgaps to make sure that a $100 refund doesn’t turn into a $10 million payout. From top to bottom, the industry needs an overhaul before it can truly flourish,” said Gardner.