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Recent high-profile hot wallet breaches have sent shockwaves through the crypto community, prompting industry experts to weigh in on potential security lapses and the urgent need for enhanced cybersecurity measures.
Benzinga spoke to experts who highlighted the significance of robust security infrastructure, the vulnerabilities of hot wallets and the importance of global cooperation in ensuring a safer crypto environment.
As these concerns gain momentum, Benzinga's upcoming Future of Digital Assets conference on Nov. 14 is a pivotal platform with a dedicated panel set to delve deep into the realm of cybersecurity.
Hacks Drive Millions In Losses In 2023: Founded in 2017 by Bijan Tehrani and Ed Craven, Stake.com, a digital casino and sportsbook platform, faced a security incident earlier this week leading to an estimated loss of $40 million. Through a post on X, earlier known as Twitter, Stake.com confirmed unauthorized activities from its Ethereum and Binance Smart Chain hot wallets.
Slava Demchuk, CEO of AMLBot, emphasized the importance of multifactor authentication and the need for cold storage.
"In an interconnected world, financial technology transcends borders, therefore making cross-border partnerships absolutely crucial."
In April this year, Singapore-based crypto exchange Bitrue reported a loss of $23 million to hackers in which bad actors were able to withdraw Ether (CRYPTO: ETH), Quant (CRYPTO: QNT), Gala (CRYPTO: GALA), Shiba Inu (CRYPTO: SHIB), Holo (CRYPTO: HOT) and Polygon (CRYPTO: MATIC) tokens.
In July, payment processor Alphapo, known for handling transactions for gambling platforms like HypeDrop, Bovada and Ignition, announced a security breach. This intrusion led to a loss exceeding $60 million across Ethereum, Tron (CRYPTO: TRON) and Bitcoin (CRYPTO: BTC).
Baruch Says Security Team Critical: Yaniv Baruch, COO of Playnance, expressed concerns about the increasing frequency of hacking in the digital currency ecosystem.
Also Read: Only 22 People In The World Have Over $1B In Crypto: Report
"The post-mortem analysis of the hack is not yet public knowledge, but the conduit for the exploit ... is a testament to the weak security provisions from the firm in general."
Baruch further stressed the significance of investing in the right security infrastructure and team.
Growth Alley's CEO On Hot Wallets: Raj Kapoor, CEO of Growth Alley, delved into the intricacies of hot wallets.
While users have complete control over their assets in a self-custody hot wallet, he said it hints at an inherent vulnerability.
"This breach demonstrates how important it is for institutions ... to establish complicated wallet architecture and security checks on the backend."
He also provided a comprehensive list of security safeguards that hot wallets should ideally have.
The steps that platforms could take to reduce risks of potential hazards include limiting the maximum balance stored in hot wallets at any given time to a modest percentage of total available funds in order to meet operational needs.
Platforms should also constantly monitor and replenish hot wallets whenever the amount falls below a certain level.
Also, the majority of cash should be kept in cold wallets or other secure infrastructure, to be withdrawn only when needed to fuel hot wallets.
Demetrios Skalkotos, the CEO of Defi service Expand.network, said: “Storing upwards of $40M in assets on a hot wallet is irresponsible.”
He further emphasized the need for a comprehensive approach to storage, suggesting the use of HSN or MPC-based wallets to enhance governance and security.
Benzinga's Future of Digital Assets conference aims to address these concerns head-on, fostering a dialogue that could pave the way for a more secure crypto future.
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Meet and engage with transformative Digital Asset and Crypto business leaders and investors at Benzinga's exclusive event - Future of Digital Assets. Tickets are flying- get yours!
Photo via Pixabay.
