With crypto exchanges being a favorite target for hackers, placing your cryptos at the safest hands should be a priority for any crypto investor. And according to a report by cyber security firm Group IB, the safest exchange is the long-serving U.S-based exchange, Kraken. The report considered a variety of factors that included the level of technical security, the rigidity of the KYC and AML procedures and the reliability of the password protection protocols. It rated the world’s second-largest crypto exchange, OKEx and recently-acquired European exchange, Bitstamp among the riskiest exchanges.
How Safe Is Your Exchange?
In the first nine months of 2018, close to $1 billion worth of crypto has been stolen by hackers. A great majority of this was stolen from crypto exchanges, an indicator of just how crucial it is to put your crypto holdings with an exchange that has put in place sufficient security.
According to Group IB’s report, the San Francisco-based Kraken is the undisputed safe haven. Kraken was the only exchange that the report deemed worthy of being on ‘the most secure category.’
The Moscow-based cyber security firm partnered with CryptoIns, an online crypto insurance platform to develop a framework that categorized exchanges into four groups in order of risk. Those in the first were deemed the most secure and cheapest to insure, with those in the fourth being deemed extremely risky and almost impossible to insure.
Kraken was the only exchange in the first category. Speaking to tech magazine The Next Web, a spokesperson from Group IB explained that “the base insurance rate is 2.5 percent per quarter, with a discount applied depending on the group.” With the maximum discount being 50 percent, Kraken’s insurance rate stood at 1.25 percent, the lowest in the industry.
In the second group came in a big number of exchanges, the most notable of which is U.S giant Coinbase Pro and Bittrex. For this group, the insurers would demand a 1.5 percent premium to insure the digital assets.
The largest group of exchanges belonged to the third group, a group in which the insurance rate stood at 1.9 percent. The world’s largest exchange by daily trade volume, Binance belonged to this group, with other notable exchanges being the Circle-owned Poloniex, bitcoin derivative trading platform BitMEX, the controversial Bitfinex and South Korean giant Bithumb. Peer-to-peer trading platform LocalBitcoins was also included in the group, as was ERC-20 wallet, MyEtherWallet.
Exchanges in the fourth group were considered extremely risky and almost uninsurable. They included the Luxembourg-based Bitstamp which was recently acquired by a South Korean investment firm, Zaif, TopBTC, and Bit-Z. Bit-Z and TopBTC are the 19th and 24th largest exchanges by trade volume respectively according to CoinMarketCap. Yobit, an exchange that has recently been rocked by accusations of price manipulation was deemed the most insecure exchange.
Even after being pursued for the reasons behind labeling an exchange as too risky to insure, Group IB and CryptoIns stated that the information was confidential.