Exchanges

Prominent cyber-security firm Group-IB has graded the security of online cryptocurrency exchanges, as a means of assessing insurance risk. It found long-standing platform Kraken to be the most secure, with OKEx, Huobi Pro, and CoinCheck among the riskiest.

Alongside IT platform CryptoIns, Group-IB claims to have developed the world’s first assessment system for determining the insurance premiums required to adequately cover cryptocurrency kept on major exchanges.

Losses as a result of cyber-attacks on exchange software, theft, fraud, and illegal actions of crypto-exchange personnel are all apparently covered by the new cryptocurrency insurance policy.Users across more than a dozen exchanges can now request their hodlings be financially protected by CryptoIns.

The framework weighs criteria like the level of technical security, the reliability of key storage, passwords, and personal data of customers provided by each exchange.

It also considers the quality of the individual risk management systems of each, and how rigid the know-your-customer (KYC) and anti-money-laundering (AML) procedures.

“In the first place, we assess how crypto exchanges deal with crypto and fiat assets: what are the exchanges assets keys’ storage and management procedures,” a Group-IB spokesperson told Hard Fork. 

“In some cases, with founders’ consent, the assessment includes penetration testing using social engineering methods aimed at the network compromise through the most vulnerable link at any organization – humans.

”The CryptoIns platform was developed by Swiss broker ASPIS SA, with Selecta Insurance & Reinsurance Company handling all insurance coverage.

Cryptocurrency on Kraken is the cheapest to insure

The insurance framework sorts cryptocurrency exchanges into four groups, in order of risk. Group-IB deemed exchanges in the first group to be the most secure, while considering the fourth group to be completely uninsurable. The base insurance rate is 2.5 percent per quarter, with a discount applied depending on the group (with a maximum of 50 percent discount).

The only cryptocurrency exchange Group-IB deemed worthy of the most secure category is the long-serving Kraken. “According to our estimates, Kraken is the most secure exchange, with 1.25 percent insurance rate,” Group-IB told Hard Fork. 

This means that for me to insure 1 BTC worth of cryptocurrency stored on Kraken, it would cost me 0.0125 BTC for 90-days worth of coverage.The second group includes Bittrex and Coinbase Pro, with cryptocurrency kept on these exchanges demanding a 1.5 percent insurance premium for protection.

Digital assets on cryptocurrency exchanges Binance, Bitfinex, Bithumb, Bitmex, Localbitcoins, MyEtherWallet, and Poloniex were all assigned premiums of 1.9 percent, making this the most commonly assigned risk grading.

The least secure cryptocurrency exchange Group-IB analyzed was Yobit, which was removed from the list altogether just before going public with its insurance framework.

Other excluded exchanges include Zaif, Bitstamp, TopBTC, and Bit-Z, the Group-IB spokesperson told Hard Fork. Unfortunately, when pressed, neither Group-IB or CryptoIns were prepared to reveal the exact considerations made when labelling exchanges too risky to insure, stating that such information is confidential. 

The maximum amount of cryptocurrency users are able to be insure is the equivalent of 15 BTC ($96,000, at print time), with premiums payable in up to 100 different coins.

CryptoIns says it will issue insurance payouts in Bitcoin. Full-year coverage is also available, with the base premium costs increasing proportionally with the period of the coverage.

A representative also confirmed that those interested in covering their cryptocurrency will need to submit to KYC/AML procedures.

BY JACK MORSE1 DAY AGO

It's not just the hacks and outright scams that make cryptocurrency a risky investment. According to a report from the office of the New York state attorney general, the exchanges themselves — the places where would-be investors go to buy and sell cryptocurrencies like bitcoin and ether — are not doing enough to protect their customers. And that should concern you. 

SEE ALSO: It only took 37 seconds for two bitcoin 'celebs' to start fighting on a cruise ship

 The in-depth look at 13 exchanges, released today, details all the ways in which major exchanges fail to guard their customers against fraud, manipulation, and abuse. It's not a pretty picture. "[Virtual] asset trading platforms now in operation have not registered under state or federal securities or commodities laws," reads the report. "Nor have they implemented common standards for security, internal controls, market surveillance protocols, disclosures, or other investor and consumer protections.

Accordingly, customers of virtual asset trading platforms face significant risks.
"That those risks are varied and wide-ranging was perhaps to be expected.

That they are not limited to some of, shall we say, the less scrupulous exchanges was perhaps not.  The New York State attorney general sent voluntary questionnaires out to 13 exchanges, and nine decided it was in their best interest to respond. The exchanges that did play ball include major names like Bitfinex, Bittrex, Coinbase, and Gemini Trust Company.

Binance Limited, Gate.io, Huobi Global Limited, and Kraken all essentially told the AG to buzz off. Which didn't go over so well. "Based on the results of our report," wrote the official Twitter account of New York state attorney general Barbara Underwood's office, "we have also referred three platforms — Binance, Gate.io, and Kraken — to the New York State Department of Financial Services for possibly operating unlawfully in New York."



NY AG Underwood✔@NewYorkStateAG · Sep 18, 2018Replying to @NewYorkStateAG


Some platforms do not insure against losses at all.



NY AG Underwood✔@NewYorkStateAG

Based on the results of our report, we have also referred three platforms – Binance, http://Gate.io , and Kraken – to the New York State Department of Financial Services for possibly operating unlawfully in New York.

6:24 PM - Sep 18, 2018294171 people are talking about thisTwitter Ads info and privacy

The report looked at the possibility of market manipulation and insider trading at each exchange, in addition to the prevalence of automated and algorithmic trading. Many of the companies running the exchanges, the report shows, buy and sell cryptocurrencies on their own exchange — perhaps in an effort to maintain liquidity. 

Coinbase, for example, told the AG that close to 20 percent of its "executed volume" was its own trading. Why is this a potential problem? "[When] a significant percentage of the volume in one or more assets on a venue is attributable to one source," the report explains, "customers face the risk that the availability of liquidity in those assets could change, without notice and at any time, including when liquidity is needed most — namely, in times of market volatility or rapid price movement.

"In other words, if the market suddenly tanks and Coinbase stops buying and selling on its own exchange, those mom and pop investors looking to offload their crypto before it hits rock bottom may not be able to find buyers. And then they'd be left holding some rapidly shrinking bags. 

Coinbase, need we remind you, is one of the better regulated exchanges. Kraken, which declined to answer the AG's questions, appeared to dismiss the very notion that scams even matter at all when it comes to trading cryptocurrency. 

"In announcing the company’s decision not to participate in the Initiative," notes the report, "Kraken declared that market manipulation 'doesn’t matter to most crypto traders,' even while admitting that 'scams are rampant' in the industry.

"This should not inspire confidence. But hey, it gets worse. In a section titled "Protections for Customer Funds Are Often Limited or Illusory," the report helpfully informs us that "Generally accepted methods for auditing virtual assets do not exist.

" What's more, it continues that "several [tracking platforms] do not claim to do any independent auditing of their virtual currency holdings at all.

"So, in conclusion, many cryptocurrency exchanges appear to be vulnerable to large-scale price manipulation via bots and fail to appropriately protect investors' funds.

That's something to keep in mind the next time your friend passionately attempts to convince you to put your savings into cryptocurrency. 

Coinbase shared big news Monday that federal regulators are allowing the popular cryptocurrency exchange to proceed with plans to sell cryptocurrency tokens that are deemed securities.

Last month, Coinbase acquired Keystone Capital, a California-based FINRA-registered broker-dealer that operates as an alternative trading system.

With the announcement, the SF-based cryptocurrency exchange disclosed that it would still need to get regulatory approval to operate under the Keystone licenses.

Today, the Securities and Exchange Commission and Financial Industry Regulatory Authority gave Coinbase just that, Bloomberg reported, approving that deal alongside the acquisitions of Venovate Marketplace and Digital Wealth.

Coinbase confirmed these details to TechCrunch as well.Today’s news opens up the scope of Coinbase’s ambitions to the billions of dollars that have been raised in initial coin offerings over the past several months.

With permission to trade tokenized securities, Coinbase users could soon have the ability to move beyond the limited cryptocurrency options currently available to be traded on the site’s central exchange which currently just lists Bitcoin, Bitcoin Cash, Ethereum and Litecoin.

The company announced last week that it was exploring adding five new tokens to its exchange, including Cardano, Basic Attention Token, Stellar Lumens, Zcash and 0x.

In a blog post, the company specified that the announcement did not necessarily deem that these tokens were not securities and that classification might vary by jurisdiction.

The cryptocurrency industry saw the worst first three months of 2018 when the market capitalization fell from $830 billion in January to under $300 billion at the beginning of February.

Yet, despite the issues regarding regulatory concerns, the potential threat of money laundering, and cryptocurrency exchange hacks, it doesn’t appear to be denting enthusiasm from investors. So much so, that aside from traders putting money into the more popular digital currencies — Bitcoin, Ethereum, and Litecoin — they are now turning their attention to other coins to broaden out their portfolios.

And now there may be a solution for investors that makes it easier to do so.

Creating a platform that combines fiat and tokens

Cryptology.com is a next-generation cryptocurrency exchange that makes fiat and cryptocurrency trading easy and secure. Its user-friendly web platform provides attractive conditions for professionals and offers an option of a mobile app for those wanting to trade on the go.

A basic web version has gone live this month. An advanced professional version of the trading platform with margin trading is planned to be launched in Q3 2018. The official launch of the iOS and Android app took place in March and users can now trade cryptocurrency wherever they are.

According to this blog, ‘it’s the first cryptocurrency exchange to combine tokens with easy fiat transactions’ such as Visa and Mastercard deposit options. Wire transfers for Europe are also on allowing for easy and secure trading.Combining tokens and fiat transactions at the same time, Cryptology’s aim is to provide a user-friendly platform where newbies and experienced traders can use a credit card.

Some of the problems that the team are striving to solve include the complexity of fiat transactions, hard-to-get rare tokens, high commissions, sluggish and complicated account verification, inactive customer support, lack of security, and cluttered interfaces, to name a few.

“We strive to create a single platform bringing together fiat transactions and a variety of tokens,” the exchange said. “Complex procedures will become a thing of the past, as users will be able to buy tokens with fiat currencies. Everything you need will be available on a single platform. You won’t have to deal with high commissions on fiat transactions, difficult KYC [Know-Your-Customer] procedures and slow support.”

Cryptology’s key advantage is an agreement with a payment system that permits it to manage fiat transactions in addition to offering its users competitive service fees. Other advantages include a 0 percent token withdrawal fee, 0 percent maker fee for token pairs, fast verification (just 30 seconds), and live support.

The web version is comfortable to use and absolutely intuitive. All the trading operations are secure and easy to carry out both for experts and newbies. Verification is quick and not complicated with support team on 24/7 to immediately handle any issue occurred. Trading with a minimum order size of just 0.01 EUR is open with 100% secure and quick transactions on cryptology.com.

Crypto withdrawals fees for Bitcoin, Bitcoin Cash and Litecoin are charged at 0.0005 and 0.002 for Ethereum. A maker fee will be listed at 0.15 percent and a taker fee at 0.25 percent. There are no minimum deposits and no withdrawal limits. The minimum order size is as low as 0.01 in fiat currency or the equivalent of $0.01 in cryptocurrency.

Delivering a range of tokens on one platform

Operating out of Singapore, the digital currencies users can trade on the exchange are bitcoin, ethereum, bitcoin cash and litecoin. These cryptocurrencies are also paired with the USD, Euro and USDT with more to be added in the future.

Several ERC20 tokens are also available on the exchange for trading, depositing, and withdrawal, with many more to be added. The goal is to offer a wide variety of tokens on a single minimalistic platform in a portfolio that is easy to manage.

With offices being opened in different parts of the globe Cryptology are working at building a truly international exchange. Services will first be offered to users in Europe, with plans to expand to the Japanese and US markets.

As the cryptocurrency market continues to grow, with new investors putting money into the industry, knowing where to go to expand a user’s portfolio is somewhat limited. Cryptology is aiming to fill this gap with their exchange that intends to provide mass access to the space that is fast and easy through a marketplace that caters to their every need.



This post is brought to you by The Cointelegraph and shouldn't be considered investment advice by TNW. Yes, TNW sells ads. But we sell ads that don’t suck.

Coinbase Inc., the largest cryptocurrency exchange in the U.S., announced today the launch of its cold-storage and custodial service for digital currencies aimed at allowing institutional investors greater opportunity to enter the market safely.

This service, to be provided through Coinbase subsidiary Coinbase Custody, already accepted its first deposit last week. Cryptocurrency will be kept by Coinbase in what is called cold-storage, or a high-security digital currency vault that would require multiple parties to use private keys to unlock and move the currency or through other controls to prevent unauthorized access.

“Coinbase Custody is a combination of Coinbase’s battle-tested cold storage for crypto assets,” said Sam McIngvale, product lead at Coinbase Custody, who called it “an institutional-grade broker-dealer and its reporting services, and a comprehensive client coverage program.

”The service is designed to act as a safe cold storage for cryptocurrency to be used by business interests such as investors, hedge funds, exchange and startups launching their own tokens with initial coin offerings.

As a “custodial service,” Coinbase Custody will also offer dedicated account support, strict financial controls and other regulated services designed to increase the safety and security of trade transactions. This will include audit trails, segregation of duties and guaranteed response times for fund transfer requests.

Given the still rocky Wild West nature of the cryptocurrency industry and markets, such a high-security service may be necessary before institutional investors enter into it.

Over the past few months, a company named Taylor lost $1.35 million worth of Ethereum to a hack and South Korean exchange Bithumb had $32 million in bitcoin and other cryptocurrencies stolen.

According to a report from cybersecurity firm Carbon Black Inc., theft and fraud have led to more than $1.1 billion in cryptocurrency lost in the first half of 2018 alone.

“This new cold-storage system has undergone rigorous penetration testing and cryptographic design review,” McIngvale said, “and we plan further, regular third-party examinations to ensure the platform’s ongoing security.

”At launch, Coinbase Custody will support bitcoin, Ethereum, Litecoin and Bitcoin Cash. The company plans to add support for more tokens and other assets with regular updates. McIngvale also commented that the company currently serves institutions in the U.S. and Europe and intends to expand into Asia before the end of the year.

This service grows out of the acquisition of three companies Coinbase announced last month: Keystone Capital Inc., a California-based Financial Industry Regulatory Authority Inc. registered broker; Venovate Marketplace Inc., another California-based company with financial licenses; and Digital Wealth LLC, a financial planning and investment management firm.

Coinbase Custody will benefit from the systems of the company’s partner Electronic Transaction Clearing, which is a registered broker with the United States Securities and Exchange Commission and a Financial Industry Regulatory Authority member subject to regulated financial reporting and independent audits.

The addition of more cryptocurrency tokens and assets by Coinbase to its custodial service will depend on additional regulatory licenses.

“Over 100 hedge funds have been created in the past year exclusively to trade digital currency.

An even greater number of traditional institutional investors are starting to look at trading digital assets,” Brian Armstrong, chief executive of Coinbase, said about Coinbase Custody. ”By some estimates, there is $10 billion of institutional money waiting on the sidelines to invest in digital currency today.

”Getting on board with Coinbase Custody will be expensive, with an initial setup fee of $100,000 and the service is only available to institutional investors with a minimum of $10 million in deposits.

Image: Pixabay, Coinbase logo

 

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