Crypto investors take come to rely on crypto exchanges because they provide liquidity, a wide range of trading pairs and convenience. Given the great benefits offered past crypto exchanges, direct peer-to-peer transactions are even so less pop, especially amid traders.

Over the years, crypto exchanges non but converted cryptos merely also became custodians and even lenders by offering funds for margin trading. Trading on such platforms became convenient, but what about their security? Many traders entrust their funds to crypto exchanges, which utilise both hot and cold wallets. However, the threat of hacking attacks has always been relevant even with the most reputable platforms.

Crypto hacking attacks don't go away

Ironically, the prefix of the term "cryptocurrency" was meant to show how secure the transactions and crypto operations are supposed to be. The origin of "crypto" is from the Greek word "kruptos," which means subconscious or secret. In fact, a "cryptocurrency" is nothing else than a digital currency built on a cryptographic organization. And so, how is information technology that nosotros constantly hear about crypto exchanges beingness successfully hacked?

Well, about cryptocurrencies are secure indeed, given that they rely on distributed ledger technology — an umbrella term that comprises blockchain. However, holding private keys is more than challenging, every bit digital wallets — whether hot or cold — become beyond a blockchain'southward horizon.

Big crypto exchanges are attacked by hackers on a abiding footing because of obvious reasons. Exchanges like Binance, Bithumb and Coincheck have been successfully hacked in the concluding two years alone.

At the stop of November 2022, South Korean exchange Upbit reported that information technology had lost 342,000 Ether in a hack, which worth $49 million at the time. The company was forced to suspend all functions for nigh 2 weeks. The "irregular withdrawal" happened when Upbit was moving all crypto funds from hot to cold wallets for security reasons.

Year-to-date, the total volume of crypto-related fraud and theft resulted in losses worth $4.iv billion, according to CipherTrace'south report for the third quarter of 2022.

The most mutual types of attacks on crypto exchanges include using social engineering, DDoS attacks and injecting malicious code through malware. As well these hacking methods, some attacks may be the effect of an inside task.

The most popular social engineering scheme is phishing. Crypto holders are tricked into assertive that they are dealing with a genuine crypto service, while in fact they are handing their personal data and private keys over to hackers. This is why information technology'southward of import to make sure you lot're doing business with a real crypto substitution rather than its clones.

DDoS attacks are malicious attempts to assault a crypto exchange'south server or network by directing an overwhelming flood of cyberspace traffic to it.

Can an exchange impenetrable for hackers be built?

The security of large crypto exchanges has evolved to the point that there are very few points of failures — but they even so exist. At this betoken, no crypto substitution that stores client funds tin claim that it's unhackable.

Still, in that location are exchanges that can brag about their success in chirapsia hacking attacks since their foundation. The best example of this is HitBTC, which was established in 2022. Notably, information technology is ane of the oldest crypto exchanges out there, which makes its history even more relevant. The platform applies advanced encryption engineering science, relies on cold storage, and encourages users to enable the 2-factor authentication and whitelist withdrawals. These measures help HitBTC ensure a high caste of security.

HitBTC has managed to attract many crypto traders, condign one of the largest spot trading exchanges — with over 800 trading pairs and over 500 digital avails.

In an article about social engineering scams, HitBTC explained:

"At that place are hundreds if not thousands of scammers out at that place trying to impersonate our employees and steal funds from our traders."

Thus, all crypto exchanges are exposed to potential hacking attacks — there is no way to avoid them. However, some crypto substitution services merits that they have no unmarried point of failure, equally they don't hold clients' crypto funds. These are and then-called decentralized crypto exchanges. If they reside on a secure blockchain network, so they're nearly likely to never be hacked.

All in all, the security of most crypto exchange is far from beingness infallible, as the cryptocurrency market is still struggling with regular threats from hackers. Nevertheless, this is also true of whatever other market, as many governments, banks and corporations are targeted by hackers as well.

Disclaimer. Cointelegraph does not endorse any content or production on this page. While we aim at providing y'all all important data that we could obtain, readers should exercise their ain research before taking whatsoever actions related to the company and acquit total responsibleness for their decisions, nor this article can be considered as an investment advice.