Hassan Maishera
Cryptocurrency fans can choose from hundreds of exchange platforms if they’re looking to buy, sell or trade digital tokens. Each of these exchanges vies with one another to get more users, offering various different features, markets, funding methods, trading pairs and fee structures. These features are important, of course, but for most traders it makes sense to prioritize security above all else.
Digital assets are valuable things, but due to the decentralized and sometimes “wild west” nature of the industry, they are also somewhat vulnerable. The only way to access crypto funds is by controlling the wallet they are stored in, and it must be said that none are 100% secure. With that in mind, it pays for traders to understand what security measures their favored exchange platform has implemented.
What follows is our choice of the five safest cryptocurrency exchanges, based on the features they employ and their reputation as perceived by the rest of the industry.
Nexo
Nexo has emerged as an extremely popular crypto trading platform since it launched in 2018 due to its positioning of itself as an institution for digital assets. The company wants to provide additional utility for its customers, beyond simple trading and features an exchange service, OTC capabilities, passive income opportunities, credit offers and more.
When it comes to security, Nexo has gone above and beyond what most exchanges have achieved by obtaining a Security, Trust & Assurance Registry (STAR) Level 1 Certification from the Cloud Security Alliance (CSA).
The STAR certification is supported by tech industry giants such as Amazon Web Services, Google and VMware, and involves undergoing a rigorous self-assessment process that involves answering 261 questions relating to security procedures. The results are then validated by the CSA Cloud Controls Matrix to ensure their validity.
The CCM verified that Nexo’s security procedures fully comply with the CSA’s strict criteria, meaning they meet the industry’s highest standards in terms of security, compliance and also transparency.
Nexo’s certification followed the completion this year of a prestigious Service Organization Control (SOC) 2 Type 2 audit, and prior to that it achieved ISO 21 001 standardization back in 2019. All three accomplishments serve as a validation of its commitment to security.
In addition, Nexo has acquired licenses to operate in numerous different legal jurisdictions, ensuring that its platform is compliant with various local regulations. Moreover, Nexo has stated that the value of its assets are guaranteed at up to $375 million.
Nexo displays each of the licenses it has achieved on its website here, and it undergoes a continuous, real-time audit of its assets by the independent accounting crypto firm Armanino.
BitMEX
One of the oldest crypto exchanges in existence, BitMEX first went online in 2014 and proudly claims that it has never been hacked during its nine years of operation. The platform is an industry-leading crypto derivatives exchange, offering both futures and perpetual swap contracts on an extensive range of digital assets. It’s known for its deep liquidity and professional user interface that makes it ideal for experienced traders.
In terms of security, BitMEX boasts extremely strong defenses. It was one of the first crypto exchanges in the world to utilize a multi-sig withdrawal and deposit system, which means that every transaction from the wallet addresses it operates must be approved by multiple parties. Meanwhile, funds are stored in cold-storage.
BitMEX claims that even if it is compromised by hackers, its security processes ensure they cannot gain access to its trading engine or databases. The hackers need to obtain multiple wallet keys to steal funds, and that has never happened.
In addition, BitMEX audits each withdrawal twice from its platform manually – with humans doing the checking. Moreover, it does not store private keys on its servers. In addition, every deposit address is verified by third-parties to ensure they contain keys managed by the company itself. So if the public key of a wallet address does not match up, the transaction is immediately rejected and reported to BitMEX’s staff.
Further reassurance comes from Amazon Web Services, the cloud service provider that hosts BitMEX’s data and exchange platform. AWS is regularly praised for the strength of its security.
Finally, BitMEX offers customers optional two-factor authentication to protect against unauthorized account access. Users can choose to utilize a strict IP pinning feature that will notify them if an unknown device is accessing their account. Withdrawals must also be authorized by clicking a verification link sent via email to the user.
MULTIBANK.IO
The MultiBank.io exchange is a relatively new player in the crypto scene, but its parent company is one of the most established online trading platforms in the financial derivatives industry. MultiBank Group was founded in 2005 with a mission to provide unprecedented regulation and safety to traders and the most trustworthy online trading environment. Since its launch, it has gained more than 12 licenses globally, and currently serves more than one million active users, with an average daily trading volume of $12.1 billion.
The company says it’s entering the crypto industry to create a more secure and trusted environment for digital asset traders by leveraging the expertise it has acquired from more than a decade of operation in the traditional derivatives sector.
MultiBank Group has paid-up capital of more than $322 million and has expanded its regulatory footprint across five continents. As such, the company is proud to say it is the world’s “most regulated financial broker”.
Regulation is reassuring for traders because it means the company is registered as a legal entity and required to demonstrate it has both financial resources and also the most appropriate security systems and controls. Because it’s regulated, the MultiBank.io platform is closely monitored to ensure it does not engage in misleading conduct. According to MultiBank, it has an unblemished track record across all regulators, including AUSTRAC, BAFIN, ASIC, CIMA, ESCA, FMA, MAS, FSC, VFSC, and TFG, since its founding in 2005.
MultiBank.io states on its website that it employs military-grade security to protect its wallet infrastructure from both physical and digital attacks. It only deals with “top tier regulated banks” and it operates a three-tier system to protect its digital assets.
Crypto.com
Singaporean based crypto trading outfit Crypto.com has expanded massively in recent years and boasts millions of users, as well as sponsorship deals with stars like Matt Damon, who have advertised its brand in commercials.
In terms of its safety profile, Crypto.com is extremely secure, storing 100% of user’s funds offline in cold wallets. Added to that, the company’s hardware storage is insured for up to $750 million against physical damage or theft.
Users are offered multi-factor authentication to protect against unauthorized access to their wallets, while there are further withdrawal protection mechanisms in place, including email verification and biometric security. It all adds up to extremely rigorous protection for Crypto.com’s clients.
In terms of compliance, Crypto.com boasts ISO 22301:2019, ISO/IEC 27701:2019, ISO/IEC 27001:2013 and PCIDSS v3.2.1 Level 1 certifications, and has been independently certified at Tier 4, which is the highest grade for NIST’s cybersecurity and privacy frameworks. It has also achieved SOC 2 compliance.
Perhaps the most assuring thing for users is that Crypto.com has proved its reliability in the real world. In January 2022 its platform was raided by hackers, who stole around $30 million worth of digital assets from users. However, it could have been much worse. Forbes reported that Crypto.com was able to quickly prevent more unauthorized withdrawals thanks to its strong security measures, and it fully reimbursed all affected users within hours of the attack. Since then, it has learned from what happened and introduced enhanced security measures to prevent the incident from occurring again.
Binance
Binance didn’t become the biggest crypto exchange in the world in terms of trading volume by being a slouch when it comes to security. The platform was launched back in 201 by its founder and CEO Changpeng Zhao, and has emerged as one of the biggest security advocates in the crypto industry.
The platform has implemented strong security measures, keeping the bulk of both its own, and user’s funds in secure cold storage. It monitors all withdrawals and password reset attempts in real-time, with any unusual transactions suspended for up to 48 hours to give users time to report any theft. Moreover, user’s sensitive data is fully encrypted, and multiple sign-on protocols are employed, including two-factor authentication, SMS and email verification.
Where Binance really excels is in the robust risk control measures it operates to protect users against scammers and account takeovers. It does this by preemptively identifying malicious actors before they strike, maintaining a lengthy list of suspicious wallet addresses. Its system will send real-time alerts in the event it identifies someone is about to be scammed, while its Binance Verify system makes it simple to verify official Binance web domains, email addresses, phone numbers, Telegram and Twitter accounts, and WeChat IDs. Users can assist Binance in its enterprise too using a reporting tool to report any suspect wallet addresses or links.
In a June 2023 blog post, Binance said these risk controls have identified more than 40 million fraudulent transactions to date, protecting more than 5.2 potential victims from scammers and helping to avoid losses totaling more than $460 million. Meanwhile, its anti-account takeover measures have helped to protect 67,000 victims from being hacked, preventing losses that would have added up to more than $223 million.
It can be said that Binance’s security comes at a cost, with its verification process being fairly complex to most other platforms. Its user interface is not that simple for beginners either, and the U.S. version of its exchange is more limited than the global platform.
Like Crypto.com, Binance has suffered a serious security breach in the past. In 2019, it was reported that attackers managed to steal more than $40 million worth of crypto, but the company moved quickly to prevent further withdrawals and promptly refunded all affected users.
