The crypto world has a hacking problem.
Specifically, cryptocurrency exchanges have a hacking problem. In 2018 alone, we’ve seen at least four major exchange hacks with more than $750 million stolen (not to mention a few smaller exchange hacks).
Security and protection from hackers have become paramount when using a crypto exchange, but how do you assess the security threat?
Luckily, a prominent cybersecurity firm, Group-IB, has done it for us. In a new report, published in partnership with CryptoIns, every major crypto exchange is ranked based on a variety of security features.
Kraken is the Most Secure Cryptocurrency Exchange
Founded in 2011, Kraken is one of the oldest crypto exchanges out there. In that time, they have developed one of the most impenetrable exchanges.
Kraken was the first exchange to pass a verified proof-of-reserves audit and is integrated with BitGo, one of the leading cryptocurrency security companies.
The Group-IB report cites Kraken as the most secure exchange as a result. Further, Kraken is the only name in the report’s top-tier group, considered the least risky.
Further reading: 8 Cryptocurrency Best Practices (Keep Your Crypto Safe)
The Four-Tier Ranking
Group-IB divides the major cryptocurrency exchanges into four groups based on their security features. Below are the results:
Group A – Kraken.
Group B – Bittrex, Coinbase Pro
Group C – Binance, Bitifinex, Bitmex, Bithumb, Poloniex, Localbitcoins, MyEtherWallet.
Group D – OKEx, Huobi Pro, Coincheck, Bitstamp, Bit-Z, Zaif
OKEx: “Completely Uninsurable”
Group-IB considered the last pool “completely uninsurable” due to the security risk involved. That should come as a warning sign to anyone trading or storing their cryptocurrencies on these exchanges.
Perhaps the most surprising name in this group is OKEx. The exchange is now the second-largest in the world by 24-hour volume and was named the “Crypto Exchange of the Year” at the recent Malta Blockchain Awards.
How Were the Crypto Exchanges Ranked?
Group-IB compiled the rankings based on a number of security features including:
- Technical security levels.
- The reliability of private key storage.
- Password requirements and 2FA options.
- Protection of customer data.
- Risk management.
- Know your customer (KYC) and anti-money laundering (AML) procedures.
The exchanges were also submitted to penetration testing and finally ranked according to the relative cost of insuring them.
The exact scores in each of the categories were not released publicly for confidentiality reasons.
Caution: Don’t Keep Your Money on an Exchange for Longer Than You Need To
These rankings are vital for anyone looking to buy or sell cryptocurrencies. However, it doesn’t change the fact that keeping your cryptocurrency on an exchange is incredibly risky.
Hackers deliberately target exchanges and, as you can see above, not all institutions are secure.
The best course of action is to keep your cryptocurrency off the exchange and in a cold-storage wallet (i.e. not connected to the internet).
Exchanges are great for buying, selling, and trading, but don’t keep store your money there for a long period of time. If you don’t have 100% control of your private keys, you don’t have 100% control of your crypto.
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