It turns out that eight major cryptocurrency exchanges hold more than 1.9 million BTC (worth about $14 billion), a figure calculated by investor and entrepreneur Trace Mayer, who emphasized the scale of the danger involved.
By tweeting on Monday, December 2, 2019, Mayer argued that these huge BTC holdings in exchange wallets pose a great threat to the industry. According to him, such amounts of BTC “just waiting to be stolen.”
Attacks on stock exchanges
Mayer is of course referring to the many cases of exchange hacks and other incidents that have resulted in the loss of large sums of Bitcoin. In 2019 alone, such platforms in Canada, New Zealand, and South Korea were shut down for various reasons.
Not all of these collapses were caused by cybercriminals. For example, in the case of QuadrigaCX from Canada, the reason for the closure of the exchange was the death of its CEO, Gerald Cotten. As a result, no one had access to the funds in the company’s cold wallets.
If any major security breach occurs on any major exchange, billions of dollars in Bitcoin could be lost.
Beware of hackers!
In early 2019, CipherTrace warned that hackers were becoming an increasingly visible and present threat to the security of cryptocurrency exchanges. Investigators reportedly suspect that some of the hacks that occurred in 2019, including those involving Cryptopia and Bithumb, were also the result of inside jobs.
Mayer says cryptocurrency advocates need to understand the principle that says, “if you don’t have private keys, you don’t have Bitcoin.” Unfortunately, exchanges are not regulated brokers or banks. Holding large amounts of BTC on them is still a huge risk. The best proof of this is the fact that even one of the leading exchanges, Binance, was hacked a few months ago. Its CEO, CZ, has long been educating customers not to hold cryptocurrencies on the platform if they don’t have to.
Polish clients of the Bitmarket exchange also found out about the above in 2019, when it disappeared from the network overnight.
