August 27, 2021

Outsmarting Crypto Criminals: How Exchanges Can Protect Users

It is rather sad, but still a reality, that crypto criminals are getting smarter with every crime. Given that any hacking of the exchange negatively affects the value of the virtual currency, the one question is on everyone's lips: will industry service providers be able to keep up with the attackers? About this and much more you will learn from this blog post.

Things Aare Heating Up

It shouldn't surprise you if we say that the crypto space is a hotbed of crime. And there's a very specific reason for that. Thanks to new technologies and the formation stage of the industry, scammers have long identified ample opportunities to profit from illicit activities. Indeed, any new approach to the financial sector is welcomed by the criminal society as a chance to "launder" money and search for victims.

According to Google Trends, the interest in digital cash is now just off the charts and even exceeds the 2017 hype. Mere proof that the market is becoming dangerous, and protecting themselves is ever more complex. Even the Ndrangheta, one of the most powerful and dangerous organized crime groups in the world, is increasingly targeting modern tools such as cryptocurrency and the darknet. This became known from a report covering organized crime in Italy for the first six months of the last year (the most recent period for which data are available). But this is not the only example.

KYC Is No Panacea

Verification of personal data is one of the most common measures among exchanges. Not so long ago, Binance, the giant of the industry, has tightened the requirements for API-keys users (more details are right here). The plan aims at improving user security and fighting financial crimes.

Nevertheless, one focus on KYC is clearly not enough to eliminate intruders from the platform. The criminal society can abuse the industry because it adapts to the new challenges and conditions quickly, breaks the rules of the game, and has extensive experience.

If traditional tools like "know your customer" can stop amateurs, then real pros with the right mix of skills can easily circumvent controls. After all, this is what they have been doing for decades in traditional financial services.

Is There a Solution?

User data is a valuable resource in the digital age and more and more people are beginning to realize this. To protect their customers, industry service providers must give their best and increase spending to improve the quality of service. One way around this is best practices in cybersecurity. For example, the internet platforms can get Payment Card Industry Data Security Standard, although most regulatory authorities don’t require them to do this. These rules apply to the payment card industry, however, they can be an excellent solution for creating a protective environment in the crypto space.

In addition to implementing such measures, service providers need cyber-trained employees, decent technologies, and the proper processes to respond to threats in a quick, efficient and effective manner. In this regard, you can learn a lot from the payment and electronic money industry.

Combine all ingredients with a highly qualified support service, and you have a chance to keep pace with fast-evolving technologies and tactics that use crypto criminals. Discover how to protect yourself and your assets on your own in our article

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