Centralised Finance Platforms Urged to Prioritise Security After $200 Million Bitmart Hack.
A recent cybersecurity report has exposed a significant cybersecurity gap in the cryptocurrency exchange sector, revealing that a mere 10% of centralised crypto exchanges meet the criteria for a 'good' security rating. The report highlights the pressing need for comprehensive security measures in an industry that witnessed a staggering $2.2 billion in breaches and exploits in 2021 alone.
Rising Threat Landscape and Lack of Regulation
Cryptocurrencies, approaching a $2 trillion market cap, have long been a prime target for cybercriminals due to the absence of comprehensive regulatory frameworks akin to traditional financial sectors. The report points out that while innovation thrives in the crypto space, adherence to cybersecurity best practices often lags.
Escalating Breaches and Exploits
The Crystal Blockchain's Year in Review report indicates a worrying trend, with centralised finance breaches amounting to $400 million and DeFi exploits reaching a staggering $1,800 million in 2021. Despite a mere 5% YoY increase in centralized finance (CeFi) hacks, decentralised finance (DeFi) attacks caused ten times more significant financial damage than in the previous year.
Bitmart Hack and Industry Compliance
The high-profile Bitmart hack, resulting in a $200 million loss for users in May 2021, could have been averted through better compliance with industry standards, according to the cybersecurity report. The incident was attributed to improper private key management, a recurring issue identified in multiple security breaches in 2021.
The Role of ISO 27001 and SOC 2 Standards
The report emphasises the importance of adhering to established cybersecurity standards, notably ISO 27001, which addresses internal control over private keys. Compliance with ISO 27001 and the SOC 2 voluntary security standard, developed by AICPA, could significantly enhance security measures for crypto exchanges. These standards focus on monitoring suspicious activities, access control, unauthorised changes, and immediate responses to cybersecurity incidents.
Cybersecurity Ratings of Crypto Exchanges
The analysis of 301 centralised crypto exchanges by the CER cybersecurity ranking platform reveals that a mere 32 exchanges (10.6%) achieved a 'good' security rating in 2021. A majority of 230 platforms (76.4%) were rated 'D,' the lowest rating, indicating a glaring security deficit in the sector. Only six exchanges, including Cryptology, Kraken, and Coinbase, secured the top 'AAA' rating.
Call for Heightened Security Measures
As the cryptocurrency industry grapples with an upward trend in hacks and illicit activities, the report underscores the urgent need for prioritising cybersecurity. It recommends crypto exchanges adopt best practices in private key management and commit resources to comply with established cybersecurity standards, particularly ISO 27001 and SOC 2. This proactive approach is crucial to safeguarding users' funds and preventing mega-hacks like the Bitmart incident.
In an industry where trust and security are paramount, the report serves as a wakeup call for crypto exchanges to fortify their defences and instil confidence among users and investors.
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