Two Security Compromises in the Blockchain Ecosystem

It’s time to talk about another few crypto scams that have occurred or been unearthed in the last week or so.

Coinroom, a Polish cryptocurrency exchange, has apparently shut down and disappeared with their customers’ money. They basically stopped operating overnight and vanished off the face of the Earth. Registered in 2016, the company is now being revealed to have some fairly sketchy practices in place.

First, their regulations stipulate that customers only have one day to withdraw their funds. Most customers sign these things without even looking at what they say, and that is a very strange regulation to have. Coinroom seems to have sent an email blast to customers announcing the termination of their contracts and giving them the one day to withdraw funds, but even the customers who did act in time allegedly received part or none of their money.

A Coinroom customer went to the company’s headquarters 2 days after receiving the email, and “the lady at the reception did not want to let me in, she claimed that nobody was in the office. Instead, she called someone from the company. I was asked to leave my details. Nobody contacted me.”

What This Says About Exchanges

This is where it actually makes sense to look at the backers and countries supported for cryptocurrency exchanges. When people put their reputations on the line to work with a company, you can trust that there is going to be a higher quality of care in that case. Frankly, this is one of the reasons that Coinbase has been successful. They are viewed as the most trustworthy.

A lot of exchanges are fly-by-night operations that have just popped up and are depending on low fees and looser privacy disclosures to attract new customers. This is fine, but comes with risks that customers should be aware of. Even if a company doesn’t have well-known backers, it helps to look at what countries it operates in. Having U.S. operations makes it far more likely that they are meeting some regulatory guidelines.

Wallet Service Compromised

Another security hiccup has occurred in a hack of GateHub, a cryptocurrency wallet service. On June 6th, they announced that 100 Ripple Ledger wallets were compromised, likely using an application programming interface (API) to gain access to the encrypted keys.

The total “take” from the heist amounts to $9.5 million, a large portion of which has already been laundered through mixer services. Funds are often laundered out through cryptocurrency exchanges, with mixing services, merchant service providers, and peer-to-peer networks also being a big part of the exit plan for hackers.

GateHub has not posted any official or final conclusions, but with 23,200,000 XRP missing, this does not reflect well on their security. Hackers were able to identify a security flaw in their system, scale it out over more addresses, and co-opt a large amount of funds before anyone was the wiser.

This is once again representative of the problems in the industry that result from low barriers to entry and minimal regulation. Although those are often seen as a good thing – “democratization” – it can also be bad for consumers who don’t know enough about how to manage their funds. Cryptocurrency wallet services are not something to trifle with and users should all be aware of the risks.

eToro
Key Features
Accepts customers from the USA
Award-winning Cryptocurrency trading platform
Wide variety of crypto assets
One of the fastest growing brokers in the world
Min Deposit
$50
United States
Key Features
Accepts customers from the USA
Award-winning Cryptocurrency trading platform
Wide variety of crypto assets
One of the fastest growing brokers in the world
Payment Methods
Wire Transfer, Bank Transfer
eToro is a social trading platform based in Cyprus. The company has revolutionised the online trading industry by introducing innovative ways for traders to capitalise from the financial markets.
Cryptoassets are highly volatile unregulated investment product. No EU investor protection. Your capital is at risk.
PaxForex
Key Features
Low minimum deposit
Founded in 2010
Spreads from 0.3 pips
Min Deposit
$200
United States
Key Features
Low minimum deposit
Founded in 2010
Spreads from 0.3 pips
Payment Methods
Credit Card, Debit Card, Wire Transfer, Bitcoin, Ethereum, Neteller, Perfect Money, QIWI, Skrill, UPayCard, WebMoney
You are unlikely to find a more comfortable broker than PaxForex. Our company provides customers the best possible conditions for successful Forex\Cryptocurrencies, Spot metal\Stocks trading. We have offers for both beginners and experienced traders. The main engines of our progress at the financial trading t are spotless reputation; focus on customers and innovative approach to business development. Our achievements have been confirmed by the successes of every one of our traders. Today we are a well-known lowest spread broker trusted by hundreds of thousands of customers worldwide. We assure you that working with PaxForex ensures the highest level of service, strict compliance with all the terms of trading, and reliability provided by the most advanced technologies.
Coinbase
Key Features
Trusted provider
Online Wallet
2 Factor Authentication
Beginner friendly
Min Deposit
$
United States
Key Features
Trusted provider
Online Wallet
2 Factor Authentication
Beginner friendly
Payment Methods
Credit Card, Debit Card, Euro Bank Account, 3d Secure Credit Card
Coinbase is one of the first places that made it easy to buy bitcoin and has since become a widely trusted exchange in the market.
Bitcoin Revolution
Key Features
Partnered with only top quality, reliable and professional brokers
Easy to use trading platform with auto or manual trading options
No hidden fees with free to use software
Min Deposit
$200
United States
Key Features
Partnered with only top quality, reliable and professional brokers
Easy to use trading platform with auto or manual trading options
No hidden fees with free to use software
Payment Methods
Visa, Mastercard, Credit Card, Debit Card, Wire Transfer
Bitcoin Revolution is an automated trading platform that trades bitcoin for you. It will get you into a trade and close the position, all you need to do is turn it on.
Bitpanda
Key Features
Fully automated platform with instant transactions
A wide variety of payment options
Good for beginners
Min Deposit
$
United States
Key Features
Fully automated platform with instant transactions
A wide variety of payment options
Good for beginners
Payment Methods
Visa, Mastercard, NETELLER, Skrill, Sofort, Giropay, EPS, Credit Card
BitPanda is a Bitcoin broker based in Austria. It offers a wide range of payment methods and has good prices.
Bittrex
Key Features
One of the largest cryptocurrency exchanges.
High volume across all pairs
Perfect for large and small buyers/sellers
Min Deposit
$
United States
Key Features
One of the largest cryptocurrency exchanges.
High volume across all pairs
Perfect for large and small buyers/sellers
Payment Methods
Credit Card
CEX
Key Features
Margin Trading
Legal compliance
Advanced Reporting
Various Payment options
Min Deposit
$20
United States
Key Features
Margin Trading
Legal compliance
Advanced Reporting
Various Payment options
Payment Methods
Credit Card, Debit Card, Wire Transfer, Cryptocurrencies
Cex.io offers exchange of fiat currency for Bitcoin and Ethereum, as well as Bitcoin/Ethereum trading against the USD.