African Cryptocurrency Exchanges Forced to Step up Security

Cryptocurrency exchanges in some of Africa’s biggest bitcoin markets have been forced to rethink their security to thwart persistent attacks from hackers, a trend that has troubled trading platforms all around the world.
Also read: Cointext Launches Bitcoin Cash SMS Wallet in Argentina and Turkey
The Worst Yet to Come for African Exchanges
Exchanges in the African continent have been relatively unscathed, suffering scant losses amidst the $930 million that’s been stolen from global exchanges so far this year, according to data by U.S. cyber security firm Ciphertrace.
The most notable assault on investor funds in the continent of 1.2 billion people happened around March in South Africa. It wasn’t a cyber attack on an exchange, but rather a scam. Fraudsters at BTC Global, a supposed cryptocurrency investment firm, made off with about one billion rand ($80 million) after 28,000 South Africans succumbed to the false promise of incredibly high, quick returns on their investment, police said.
As thefts have stoked exchanges worldwide, some African platforms have woken up to the need to strengthen their security to safeguard investor funds. This is particularly crucial in a continent where cryptocurrency markets are populated by people who trade with a certain degree of ignorance in many cases, lured by the promise of quick riches. Incidents of fraud or stolen money can smear a market struggling to build confidence in the absence of regulatory oversight.
“We have noticed a number of attempts to breach our system but we have managed to maintain our defenses and we keep on learning,” Suleiman Murunga, chief executive officer at Ugandan exchange Coinpesa, told
Suleiman Murunga
“We (now) use suspicious activity monitoring tools to track user behavior in order to spot bad actors,” he said, adding that the company, one of the biggest in the East African country, also uses two-factor authentication.
Murunga stated that only a small portion of investor funds held on the exchange are kept in a hot wallet, of the kind targeted by hackers. The bulk of the funds are held offline, in cold storage.
Don’t Blame the Trading Platform – Blame the User
When breaches occur, exchanges are not always to blame. Sometimes investors simply aren’t careful. There have been instances where attackers gained access to individual accounts on the Zimbabwean exchange Golix before its forced shutdown in May, taking advantage of email password vulnerabilities to facilitate transactions.
Although no money was stolen, the 23 affected users noticed some changes to their accounts such as the conversion of their cryptocurrencies and the acquisition of additional coins through U.S. dollar balances they held in their accounts. This is according to Golix, which now has a presence in seven African countries. Back then, the exchange didn’t ask investors for 2FA upon signing up.
In Nigeria, Africa’s biggest bitcoin market, where trades reached $260 million on just one exchange this year, the threat of cyber attacks is real. In 2016, the Ibadan-based Naira4dollar firm didn’t receive the $15,000 worth of BTC it had bought to replenish its wallets after an attacker hacked into the trading platform’s system.
Lagos, Nigeria
Investors in Nigeria and Ghana also fell victim to a $50 million hack

Post written by our friend Jeffrey Gogo and Syndicated from
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