3% of Cryptocurrency Exchanges Were Hacked Last Year, Cryptocompare Report Finds

Francisco Memoria

A report published by leading cryptoasset data provider CryptoCompare reveals that 3% of cryptocurrency exchanges were hacked last year, and that only 4% offer some form of insurance.

In a press release shared with CryptoGlobe, CryptoCompare announced an update to its cryptocurrency Exchange Benchmark tool that reveals the top cryptocurrency exchanges based on several criteria, including the team behind them, the quality of their markets, geographical location, legal status, and data provision.

The Benchmark currently ranks over 160 active spot exchanges throughout the world, assigning them a grade to help users identify the lowest risk cryptocurrency exchanges in the industry. For the first time, the press release notes, U.S. and Japanese regulated exchange itBit ranked number one.

ItBit was followed by Gemini, Coinbase, Kraken, and Bitstamp which make up the top five. Notably, popular cryptocurrency exchange Binance didn’t make it to the top 10. Charles Hayter, co-founder and CEO of CryptoCompare, commented:

The industry needs reliable metrics to evaluate the vast number of cryptocurrency exchanges globally and we have been extremely pleased with the response to our analysis since launch last year. Our cryptocurrency Exchange Benchmark aims to provide this transparency by assessing exchanges using a clear methodology to assess risk

In its Exchange Benchmark, CryptoCompare found that 3% of cryptocurrency exchanges were hacked last year, and this trend seems to be continuing. CryptoGlobe reported this week Italian crypto exchange Altsbit was shutting down after being hacked, as it decided to use its remaining funds to partially reimburse affected users.

The figure is somewhat alarming as it’s well known that organized hacking groups like Lazarus specifically target cryptocurrency businesses, allegedly to fund the North Korean regime. Moreover, CryptoCompare also found only 4% of exchanges offer some form of cryptocurrency insurance.

The report also found top-tier exchanges – those graded AA to B – accounted for 27% of the global trading volume, while lower-tier exchanges – graded C-E – accounted for 73% in Q4 2019. Only 30% of trading platforms possess a crypto exchange license or are registered as a money service business.

Notably, 16% of exchanges reveal they hold over 95% of cryptocurrency in cold wallets. While such a small amount securely store most of their assets offline and only 4% offer insurance, 33% offer margin trading.

Featured image via Unsplash.