The post How CoinEx’s Response To The Security Breach Redefined Customer Trust appeared first on Coinpedia Fintech News

It was then reported on September 12, 2023 on news that some abnormal activities were found to attack several hot wallets from CoinEx’s risk control system. It didn’t take long for word to get out as soon as the CoinEx name started hitting the daily headlines and social media. The instant the breach occurred, withdrawals were halted on all platforms and trading went down. 

CoinEx’s Take on Big Security Attack

In response to the breach, CoinEx promptly enacted a series of emergency measures within the past 48 hours, including the suspension of all deposits and withdrawals and an emergency shutdown of the hot wallet server. Hot wallets are those that are online, hence they are considered to be hot. Thus, they are more at risk of being hacked than cold wallets, which store the funds offline.

The remaining assets were transferred to secure cold storage, and a new wallet architecture was swiftly developed and deployed. CoinEx’s wallet and security teams are leading a thorough investigation into the attack. Additionally, CoinEx has reached out to other exchanges to freeze assets related to the incident. 

CoinEx’s Founder and CEO, Haipo Yang, publicly expressed sincere regret for the incident on his personal Twitter account. He assured affected users that the team was diligently working to restore services and emphasized that user funds would not be impacted.

Impact of the Attack

Around $ 70M worth of crypto was stolen through the CoinEx Hack. Immediately after the attack, CET plummeted more than 20%. Additionally, the incident has tarnished the reputation of CoinEx. There has been some backlash from users over the security of the exchange, causing them to withdraw some funds.

Exchange Overview

CoinEx was established in 2017. Around One Billion dollars are exchanged daily on CoinEx. Thus, it is one of the most active crypto exchanges in the world. Over 5 million users use CoinEx. On CoinEx there is spot trading, margin trading, futures trading, and financial management services and much more!

Founded with the initial intention of creating an equal and respectful cryptocurrency environment, CoinEx is dedicated to dismantling finance barriers by offering easy-to-use products and services to make crypto trading accessible for everyone. 

How Did CoinEx Respond?

CoinEx’s reaction was swift and comprehensive. The exchange took immediate action to protect user assets:

1. Emergency Shutdown: CoinEx suspended all deposits and withdrawals, immediately shutting down the compromised hot wallet server.

2. Asset Transfer: To safeguard user funds, the remaining assets were swiftly transferred to secure cold storage.

3. Wallet Reconstruction: CoinEx initiated the reconstruction and deployment of a new wallet architecture, bolstering security measures.

4. Investigation: Rigorous investigations into the attack were initiated, led by CoinEx’s wallet and security teams.

5. Industry Collaboration: CoinEx proactively reached out to peer exchanges, urging them to freeze related assets to prevent further harm.

CoinX Transparency and User-Centric Approach-

CoinEx, cognizant of user concerns, has been actively gathering feedback across its diverse communities. Here are the key commitments:

1. Wallet Upgrades: CoinEx aims to finalize wallet upgrades, enabling phased withdrawals upon stringent security checks.

2. Independence of Product Lines: Each product line operates independently with its own risk control system, ensuring that the security incident does not impact other services.

3. Compensation Assurance: CoinEx has estimated the losses at approximately $70 million USD but reassures users that this represents only a small portion of its total assets. The exchange solemnly pledges to compensate all affected users 100%.

4. Tailored Compensation: CoinEx is formulating tailored compensation plans on a per-coin basis, with details to be shared in official announcements.

5. Ongoing Security Measures: The focus remains on upgrading the wallet architecture, calculating losses accurately, and collaborating with industry partners and peer exchanges to freeze related suspicious addresses.

No this is not the first that a cryptocurrency exchange website was hacked into. Throughout the years, there have been numerous renowned data breaks. Among the most notable examples are:

Mt. Gox: The biggest cryptocurrency exchange then, Mt.Gox experienced a breach in 2014, causing the loss of around 850,000 bitcoin. One of the biggest ever bitcoin heists.

Bitfinex: That same year in 2016, the cryptocurrency exchange Bitfinex was hacked and more than 120,000 Bitcoin were stolen. At the time, this was the second biggest crypto hack.

Coincheck: Just the year prior, in 2018, Japanese crypto exchange Coincheck suffered from a massive $534 million NEM breach. Up until now this was only the third biggest crypto hack.

With all the high profile hacks that occurred, there have been several crypto exchanges who were able to bounce back. One example is Binance. And in 2019, the cryptocurrency exchange Binance has been hacked and over 7,000 bitcoins were stolen. But, the marketplace refunded the lost amounts to its customers, and its trade continued as usual.

Among them, Binance’s recovery from the hack comes as a result of various factors. The exchange first identified and contained the breach right away. Two, binance was financially strong enough to cover the losses and even pay back users. Thirdly, Binance kept communication open and transparent with its user base throughout the fiasco.

Conclusion

The CoinEx hack serves as a reminder that even those who you would assume are the most secure and seasoned in the world of Cryptocurrency exchange are not immune to attacks. However, it’s also a memory of how exchanges can survive this attack and keep on working. 

CoinEx’s return to normal prompts reflection on key factors in choosing a crypto exchange. This incident highlights the importance of both technical expertise and the team’s integrity in protecting user interests.

---

Filed under: Bitcoin - @ October 17, 2023 7:10 am