The Binance Hack Highlights the Benefits of Non-Custodial Accounts
7000 BTC stolen is the sixth largest of all time.
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Shocking reports come from cryptocurrency intelligence agencies like CipherTrace all the time. Well over $1 billion’s worth of cryptocurrencies has been stolen from exchanges in crypto’s short history already. Yet, when well-known names like Binance start appearing on the victim list, it hits a little closer to home.
7000 BTC Stolen in One Transaction
According to a post on Binance’s help desk released late on 7th May, CZ’s powerhouse exchange became aware of “a large security breach” too late to prevent it.
Hackers were able to get their hands on API keys, 2FA codes, and “potentially other info.” By cleverly using tactics of phishing, viruses, and other attacks, in just one transaction, 7000 BTC was gone for good here.
Binance is still on lock-down with withdrawals and deposits suspended for a week while the company investigates. CEO Changpeng Zhao (CZ) has also reassured users that the funds (equalling around $40 million) will be covered by the company’s Secure Asset Fund for Users (SAFU Fund).
Yet, the fact that the world’s most popular exchange known for its innovation and international talent could be vulnerable to hackers is a hard pill to swallow. Fortunately, this time around, hackers were only able to target Binance’s hot wallet which holds just 2 percent of the company’s BTC funds. But, what about next time?
cons: 4 While it is a very expensive lesson for us, it is nevertheless a lesson. it was our responsibility to safe guard user funds.
We should own up it. We will learn and improve.
As always, thank you for your support!
— CZ Binance (@cz_binance) May 8, 2019
CZ may have put the attack “to bed” and chalked it up to an expensive lesson learned, but when will the rest of the cryptocurrency community?
It’s time to wake up and understand that if you don’t keep your private keys secure in cold storage, you’re placing your financial freedom at risk.
The Advantages of Non-Custodial Accounts
At Digitex, our condolences go out to the Binance team and we’re pleased and relieved to hear that the exchange will be compensating its affected users. However, with so many hacks in the crypto space targeting ever-more robust and sophisticated exchanges, the tendency is clear.
This pattern will not stop and the future of cryptocurrency exchanges simply cannot be custodial. Users must take responsibility for their own funds.
Centralized exchanges, no matter how advanced the cybersecurity methods they put in place, are natural targets to opportunistic and extremely intelligent hackers. However hard they fight to keep their users’ funds safe, this type of episode will repeat itself again and again.
This time around, and thanks to Binance’s credibility in the space, there’s no need to suspect foul play in the form of an exit scam or a founder potentially faking his own death. But whether an outright hack or elaborate crypto heist, users should not trust the exchange with their funds, pure and simple. If you do, your holdings are not under your own control. And that means they are at risk.
Digitex Futures Will Be an Unlikely Target for Hackers
We know that our community is looking forward to commission-free Betfair Trading. That’s been our number one value proposition right from the very start. However, with the multitude of exchange hacks occurring all the time, the fact that we are a hybrid exchange with decentralized accounts is arguably an even greater selling point.
Any online company is at risk from cyber threats, that’s a given. However, even if the Digitex Futures exchange were to be hacked, we would have no funds to steal. This makes it a highly undesirable target for hackers. All our users’ account balances will be non-custodial.
The greatest benefit of this is that we, the exchange, will not hold your money and cannot steal it. We can’t even touch it. You have control over your own crypto assets, no one else. Moreover, your funds will be stored in an independent smart contract which is infinitely more secure and technically impossible to hack.
Token holders are always at risk of events that can affect an exchange, such as insolvency, exit scams, inside deals, and other foul play. With our non-custodial accounts, Digitex users will never have to trust the exchange with their money.
Being non-custodial, individual users must learn how to store and save their crypto. Digitex is offering the speed and convenience of a centralized order matching engine with the security of a DEX with no single point of failure.
Thanks to our new partnership with SmartDec, one of the most respected Ethereum-approved teams out there, we will be a non-custodial exchange from day one. Commission-free, a wide variety of crypto and traditional markets, spot Betfair Trading, and decentralized accounts: an industry first.
If you still have your funds sitting on an exchange or in a hot wallet, they are vulnerable, wherever they are. Make sure that you take the appropriate steps to protect your cryptocurrency by always using cold storage, like a hardware wallet such as a Trezor or Ledger.
If you need help or have questions about our non-custodial exchange, or how to keep your DGTX safe for now, be sure to join in our Telegram group. We can also provide you with plenty of helpful material to ensure that you operate safely in the crypto space.
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