5 Reasons Why Storing your Crypto on an Exchange is a Bad Idea!
Most of us already know that storing cryptocurrency is inconvenient and almost too difficult. It’s not surprising, given how new the technology is. We’re still a little while away before we hit high adoption rates for cryptocurrency because of this. But with tech startups paving the way for innovative solutions around storing cryptocurrencies,we’ll hopefully experience more convenience, security, and trustworthy services. For some of us that continue with the struggle, we continue the with the hard route and ‘be our own bank_’. Others continue to go down the _somewhat easier route: leaving their cryptocurrency on the exchange. Keeping your cryptocurrencies on exchanges does offer some benefits though. Pros:
Offers liquidity — transfer coins in/out very quickly
No danger of losing access because of forgotten passwords or seeds
Low fees to transfer between coins
Access to a large number of altcoins
Offer multi wallet capability (storage for multiple cryptocurrencies)
No technical knowledge required to setup
Offers two factor authentication
These are significant advantages over cold storage solutions currently. However, the following will make you think twice before you keep your cryptocurrency on an exchange.
5. Exchange BTC-E seized by FBI- locking users funds
Mid 2017 BTC-E, a popular exchange in the past, was seized by the FBI over the alleged Alexander Vinnik who was found guilty of laundering funds through the exchange. Alexander Vinnik was originally thought to be one of the operators of the website, however these claims were denied by BTC-E later on. Since then BTC-E has shipped operations to New Zealand and re-branded to WEX. It is believed that most users have been able to access their funds. Having said that, it was difficult time during the down-time, with all users unsure if they’d ever be able to access their funds. Although the user base continues to grow, the community had been split over BTC-E. Several users have resisted transacting on the exchange due to their secretive operations. On the other hand BTC-E has had significant support, one user commenting “BTC-E deserves respect” over their commitment to re-opening the portal to it’s users. It has been in-evident that BTC-E played any part in the laundering. So, although BTC-E may not have been 100% at fault- the story does show you the risk you put yourself against trusting a third party to mind your coins for you.
4. Indian crypto exchange Coinsecure loses $3.5m in customers’ bitcoin
April 2018 An exchange operating in India had nearly $3.5 million worth of user’s Bitcoin stolen. The company blamed the security chief, Dr Amitabh Saxena for stealing the funds. Regardless of how the 438.318 Bitcoin went missing- it clearly shows the lack of protective measures exchanges get away with. Coinsecure claims that they are working “_day in and day out, and investigations are in full swing for a possible recovery of the lost BTC_”. However they are treading carefully, even with their promises, their website states “should we be able to recover all of our BTC, all BTC holdings will be refunded”. Key words being ‘should we be able to’.
3. Italian exchange BitGrail claims $195 million worth of Nano (XRB) lost through hack
February 2018 The exchange claimed that the cryptocurrency was stolen through a hack. Bitgrail have not accepted responsibility for the breach, claiming that the Nano cryptocurrency was flawed. Nano on the other hand continues to hold its ground, stating: “to date, all reliable evidence we have reviewed continues to point to a bug in BitGrail’s exchange software as the reason for the loss of funds.”
Once again, BitGrail confirms to have been a victim of theft. A crime made possible by taking advantage of known failures in the NANO team’s various software (Rai Node and the Official Block Explorer) and therefore, for these reasons and in accordance with the law, BitGrail doesn’t consider itself responsible for the unforeseen circumstances.- Official statement from BitGrail
After several months of halt, Bitgrail has announced a commencement of operations on 2 May 2018 at 10:00 UTC stating, “the markets and withdrawals will be operating for all coins, except for NANO/XRB. BitGrail re-open the NANO/XRB market for users at a date to be announced shortly.”
2. $400 Million Goes Missing From Japanese cryptocurrency Exchange Coincheck
January 2018 Yet another unsettling few months for investors as they wait for 500 million XEM tokens to be refunded after they were stolen. The Japanese exchangehalted all trading at the time and have recently restarted trading. This was regarded as one of the biggest cryptocurrency thefts, next to the infamous Mt Gox saga.
1. Mt. Gox Declares bankruptcy over 850,000 missing Bitcoin
2011–2014 Mt. Gox at its prime was regarded as one of the biggest Bitcoin exchanges. Unfortunately, it came to a nasty end once it was found that an extensive number of Bitcoins went missing. Investigations in 2015 found that the coins went missing over time, starting in 2011. By far, the most infamous and nerve wrecking loss in the history of cryptocurrency. The saga continues to date though, with the trustee claiming to have sold a large chunk of Bitcoin in early 2018. It was speculated but not definitive that this had a large hand in causing the Bitcoin crash around the time. The above is not intended to spread FUD. It is a reminder to be careful on how you store your cryptocurrency and raise awareness of the potential risks. The statement ‘be your own bank’, rings true still. It will continue to do so until we can receive service offerings that combine cryptocurrency with convenience, trust, and security. Having said that, there are also severe risks you carry if you do become your own bank. Damned if you do, damned if you don’t! Here’s a quick run down on different storage methods for cryptocurrencyand their associated risks. Most of the cryptocurrencies in the market today are based on ERC20. So you can also download this free guide on storing Ethereum and ERC20 tokens. But if you decide to continue storing your cryptocurrency on an exchange you may want to do the following:
Diversify across multiple exchanges- keeping your crypto on multiple exchange means less risk of losing ALL your holdings in case one exchange goes down or shuts down
Keep a small portion on an exchange for transfers while the rest in cold storage.
Coinsecure India Down After $3 Million in Bitcoin Missing
In what appears to be an attempt to test their ability to distribute Bitcoin Gold (BTG), a Coinsecure weakness was apparently exposed, and over 3 million dollars worth of bitcoin were stolen as a result. The large crypto exchange based in India filed a First Information Report (FIR) with police, alleging their own Chief Scientific Officer to be responsible. Coinsecure Hacked for Over 438 Bitcoin Secure Bitcoin Traders Pvt Ltd, Coinsecure’s parent company, filed the FIR just days ago, explaining how “user funds are securely kepts in our bitcoin wallet, who’s private keys are kept with Dr. Amitabh Saxena, CSO and Mr. Mohit Kaira, CEO at Coinsecure.in.” Interestingly, it was Mr. Mohit Kaira who filed the FIR. “On April 9th,” Mr. Kaira continued, “we were informed by our CSO […] that 438.318 were stolen from our company’s bitcoin wallet due to some attack. As the private keys were kept with Dr. Amitabh Saxena, we feel that he is making a false story to divert our attention and he might have a role to play in this entire incident.” FIR Just two days ago Coinsecure alerted users shortly after filing the FIR, “In continuation of our backend updates, we request all users to stop depositing [bitcoin core] into Coinsecure’s addresses with immediate effect until further notice. We are currently working on a solution and will keep you updated when we are ready,” its website read. “The incident reported by Dr. Amitabh Saxena does not seem convincing to us,” the FIR goes on, reminding police, “Dr. Amitabh Saxena also has an Indian Passport and he might fly out of the country soon, therefore, his passport should be seized so he can not fly out of the country. Therefore, we request you to kindly investigate into the matter as soon as possible.” Extremely Strong Understanding of the Crypto Space Dr. Saxena was appointed to Coinsecure as Chief Scientific Officer back in late September of last year, to much acclaim. He has worked with Accenture and Hewlett Packard, and was professor of Computer Science in Australia. “Among the few early adopters in the cryptocurrency ecosystem, Dr. Saxena has also contributed scientific articles based on his research in the blockchain space. He comes with an extremely strong understanding of the crypto space and has a lot of ideas and implementations,” the company’s press release announced.
$3.3 Million Stolen From Coinsecure Bitcoin Exchange, Inside Job Suspected
The CEO of Coinsecure, an India-based cryptocurrency exchange, has accused his CSO of stealing 438 Bitcoin —around $3.3 million at today's exchange rate— from the exchange's main wallet. Coinsecure announced the theft of the 438 BTC today, via two images posted on its homepage. The first image contained a statement signed by the Coinsecure team announcing the incident, and the second was a scanned copy of a police complaint Coinsecure CEO Mohit Kalra filed with New Delhi police. Our system itself has never been compromised or hacked, and the current issue points towards losses caused during an exercise to extract BTG [Bitcoin Gold] to distribute to our customers, " the Coinsecure team wrote in its statement. "Our CSO, Dr. Amitabh Saxena, was extracting BTG and he claims that funds have been lost in the process during the extraction of the private keys," Coinsecure added. But Coinsecure's CEO did not believe his collaborator's explanation and wrote in the police complaint that his fellow exec is "making a false story to divert [his] attention and might have a role to play in this entire incident." Kalra founded Coinsecure in 2014, and according to the police complaint, only he and Dr. Saxena had private keys to the exchange's main wallet.
Thought you guys might be interested. Here's what CoinSecured sent out to its mailing list today: "Dear Users, As an organization, we wanted to bring to you the sequence of events to keep all our customers appraised on the incident following the compromise that took place on the 9th of April, 2018. 9th April, 2018 - Compromise of our CSO's system. 438.31859715 Bitcoins siphoned out to BTC Address: 1BaEJquitskdXcTj53Uy6PuUtJ5a8ETWpA between 12:35 am IST – 6:29 am IST. 9th April, 2018 – CSO, Dr. Amitabh Saxena calls our CTO to inform that funds have been lost at around 12:30 pm IST. CSO, CTO and CEO immediately get onto a conference call, where Amitabh explains the sequence of events, and the steps he followed to extract BTG. Clearly, the scenario outlined by Dr. Amitabh Saxena and the procedures explained, did not follow the standard protocol. For someone of Amitabh's stature being online when private keys were extracted, saving them in clear text format, was unacceptable! Too many coincidences noticed for a hack of this nature to occur. The call ended on an inconclusive note. The tech team gets onto investigate possible hack scenarios. Multiple calls followed thereafter, trying to get more details of the incident and a possible recovery of BTC lost. Amitabh stated that initial virus scanners that he ran on his system had not picked up anything, and seeks help. Our tech team further check his system for clues or BTC available on his local system, but is unsuccessful. 10th April, 2018 – Complaint filed with the Cyber Cell, Delhi. Advised by authorities to confiscate system for further investigation. Procedures followed as advised by the Cyber Cell authorities to collect Amitabh's laptop. 11th April, 2018 – FIR filed at the Cyber Cell, Delhi, post handing over of the confiscated laptop. Investigations underway. 11th April, 2018 – Red Alert issued with Line of Control (LoC). Prime suspect is CSO, Dr. Amitabh Saxena. 12th April, 2018 – Public Announcements made as advised by the Cyber Cell authorities and various processes and steps taken to try and recover funds. A detailed synopsis of the events on the 12th and 13th April, 2018, will follow soon when we are ready to go live with our public announcements, as we are working with the authorities round the clock. Thank you for your continued support and patience. Warm Regards, Team Coinsecure" Hot mess indeed.
The incident reported by Dr. Amitabh Saxena does not seem convincing to us. The exchange in the FIR requested the authority to seize Dr. Amitabh Saxena’s passport so he cannot fly out of the country. Crypto Fraud in India. This is not the first case of insider fraud in the Indian cryptocurrency community. Earlier this month, the founder of ... Coinsecure has allegedly been hacked. Bitcoins worth of Rs 20 crore is stolen. The company believes that its CSO Dr Amitabh Saxena has a major hand in this incident. FIR has been registered. Coinsecure has promised users to pay back their money. Now the question comes—is your Bitcoin india exchange safe? Kalra tells me that the BTC were lost before Saxena extracted Bitcoin Gold, the purpose for which he was supposed to log in. That led them and the Cyber cell to believe that it might be Amitabh Saxena who was responsible for the loot. In other news, while most media houses started publishing their articles on the subject based on the TOI report, I wanted to point a few things out from there ... Our Chief Strategist officer (CSO) Dr. Amitabh Saxena was extracting BTG and he claims that the funds have been lost in the process during the extraction of the private keys. 438 bitcoins worth about Rs 20.5 crore allegedly stolen from Delhi based exchange, Coinsecure. The exchange in the FIR requested the authority to seize Dr Amitabh Saxena’s passport so he cannot fly out of the country.” A second update on the Coinsecure website assured users that their Indian Rupee (INR) funds were safe, calling on members of the Bitcoin community for any information that could help secure the return of funds.
Shahenshah is a 1988 Indian Hindi vigilante action film starring Amitabh Bachchan in the title role, along with Meenakshi Sheshadri. The film was produced an... Amitabh Saxena is going to present Lean and Six Sigma Project of a major oil company in ASQ (American Society of Quality's World conference in Charlotte, USA in May 2017 Amitabh Saxena uploaded a ... As reported by Coinsecure Exchange ,438.318 Bitcoins (worth Rs.19 Crore approx) were stolen from the exchange on, 9 April,2018, due to some attack. " As the private key are kept with Dr.Amitabh ... Skip navigation Sign in. Search In this breaking news update, Coinsecure cryptocurrency exchange has been compromised and 438 bitcoins worth Rs 19 crore have been stolen from the platform. In their initial notice, Coinsecure ...