Japan and South Korea are implementing regulatory policies to ensure cryptocurrency exchange security.
According to Blockchain security firm CipherTrace during the first half of 2018 almost $731 million worth of cryptocurrencies were stolen.
$500 million were stolen from Coincheck in Japan and $40 million from Coinrail in South Korea.
The two exchanges biggest mistake was that they stored large amounts of their assets in their hot wallets or wallet which they were connected directly to the internet instead of cold wallets giving hackers the opportunity to compromise their security.
The hackers easily took control of and access to their system quickly. They were able to steal many hundreds of millions of dollars in cryptocurrencies really fast and the exchanges were unable to stop them.
The Lack of experienced programmers and the problems in their infrastructure pushed the Coincheck CEO Koichiro Wada to admit in an interview with Bloomberg that:
"We were aware we didn't have enough people working on internal checks, management, and system risk. We strived to expand using headhunters and agencies, but ended up in this situation."
Now the investors were conserved by the fact that the exchange didn't know how the hackers gain access to their systems and because it seems that the exchange does not have the necessary technology and knowledge to stop future attacks.
This fact alone is giving another boost to the attacks on the cryptomarket due to the fact that this situation creates uncertainty among the investors and many experts are eager to expose the weakness of the technology instead of the real reason why the cryptos are falling.
Now Japan and South Korea to ensure that the breaches are not going to be successful in the future they started to apply strict regulatory policies and they are trying to establish industry standards regarding cryptocurrency exchange security.
South Korea is taking a step further and chose to regulate the cryptocurrency exchange as banks.
They will give authorities to local financial agencies to regularly monitor and check the exchanges to ensure that they are compliance.
Japan and South Korea are planning to apply even stricter regulation for monitoring the security of the exchanges and ensure that they have implemented the correct and efficient technology to their systems to prevent future hacks.
About the Author:
Marios Athinodorou is TeleTrade’s market analyst and commentator. Apart from being an experienced trader, Marios is an advanced technical analyst and is interested in trading psychology. He has 7 years of trading expertise in Forex and CFDs, providing insights to share with all kinds of traders, from beginners to experts. Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars, here.
Disclaimer: Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and education purposes. Personal Opinion of the Author does not represent and should not be construed as a statement or an investment advice made by TeleTrade. All Indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
Risk Warning: Investment services are provided by TeleTrade-DJ International Consulting Ltd, a Cyprus Investment Firm under reg. number HE272810 operating in accordance with MiFID, under license 158/11 by the Cyprus Securities and Exchange Commission. Trading in leveraged derivative financial instruments carries a high level of risk and may not be suitable for all investors. Past performance is not a reliable indicator of future results. Indiscriminate reliance on informational or historical materials may lead to losses