Wednesday, May 27, 2020

Kraken CEO: Do Not Store More than is Necessary on Crypto Exchanges

The CEO of popular cryptocurrency exchange, Kraken, has advised crypto holders to avoid storing digital currencies on exchanges more than is necessary, following the recent Cryptopia hack.

Are Exchanges Safe?

Cryptopia has become the first crypto exchange to be successfully hacked in 2019; it most likely would not be the last. The modest exchange which is based in New Zealand was infiltrated on Monday, 14th, an action which was only discovered almost 24 hours later. While the exchange has refrained from reporting the exact figure that was carted away by Hackers, it, however, called its losses ‘significant.’

After an observation that a transaction involving a transfer of almost 20,000 ETH was moved from the exchange to an unknown address, Cryptopia is deduced to have lost more than $2.5 million. The attack comes at a time of bears, and the small exchange might find it difficult to survive. Some observers have suggested an inside job, the more reason warnings against storage in exchanges have increased.

Not Your Keys, Not Your Coins

Binance CEO’s response to the recent hack has not gone down with a lot of crypto holders, and many Twitter users were quick to respond to his ‘misleading’ tweet including Jesse Powell, CEO of rival exchange, who was not afraid to give a veiled barbed response.

Changpeng Zhao, known as CZ, founder and CEO of Binance believes crypto holders should be discerning in choosing the right exchanges to trust with their coins. For Zhao, there are only three options and two advisable ones. You either choose a secure and reputable exchange, or opt for a decentralized one.

Store coins yourself. You fight hackers yourself, and guard from losing wallet yourself. Computer breaks, USBs gets lost.

Store on an exchange. Only use the most reputable, proven secure, exchanges.

Or move to DEX, disrupt ourselves.

— CZ Binance (@cz_binance) January 15, 2019


Not many agree with CZ though, and a few have accused him of sharing misguided information. What is a reputable exchange? Mt. Gox was considered one of the most reputable and secure exchanges until its hack and collapse in 2014, which led a loss of more than half a billion dollars.

Powell, Kraken’s CEO, took a different stand instead, Bancor which is supposed to be ‘decentralized’ did lose $12 million to hackers last year too. Powell believes crypto users should store their coins in hardware wallets such as LedgerHQ and Trevor instead.

“DEXes are not a panacea,” he said. “Look at The DAO. Open source just means exploits will be discovered sooner [and](probably not by good guys).”

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