The Lyon Firm is currently involved in several areas of personal privacy litigation, and is investigating crypto exchange data breach cases on behalf of plaintiffs nationwide. If you have experienced crypto theft as the result of a negligent crypto exchange, contact us for a free case review.
As the crypto world grows larger and each year, and more money flows through exchanges, it becomes a bigger target for hackers. Even the leading exchanges like Crypto.com, Binance and KuCoin have been hacked, resulting in millions of dollars lost in crypto theft. While it might seem like there is no recourse, the crypto exchange may be liable for the loss of your funds.
Unless you have your crypto locked in cold storage, in a wallet, your funds may be vulnerable. Crypto exchanges generally keep holdings in a default wallet, and every time the funds are moved, they are more vulnerable to attack.
Cybercriminals now regularly breach crypto security systems, obtain key information sets, and bypass two-factor authentication and other security systems to steal funds.
Many blockchain and crypto technologies are still experimental and have inherent vulnerabilities. Thus the funds are often compromised, and there are cases of exit scams and fraudulent coin launches. Cases of crypto exchange data breaches, theft, and investor losses are reported frequently.
Crypto Exchange Theft
Cryptocurrency is traded in exchanges which hold funds in shared group addresses, creating a security gap for hackers. Crypto coins in an exchange account are essentially only as secure as the password strength. Cryptocurrency exchanges are written in different code than the blockchains they accommodate and thus, the exchanges are more susceptible to hacking than the coins themselves.
Coins are stored on computers in the crypto exchange, though the exchange operates on normal servers or a cloud. Exchanges can be potential for breaches and crypto theft events because they operate outside of normal crypto security protocols. Consumers are urged to trade only trusted currencies on trusted exchanges.
Cryptocurrency Security Standards
Crypto exchanges have a duty to adhere to Cryptocurrency Security standards to protect consumers and allow end-users to make smart choices and decisions for purchasing and investing. The CCSS standard is followed by most cryptocurrency exchanges, but not all. The following steps are used by most exchanges, blockchain companies and crypto organizations:
- Key/seed generation
- Wallet Creation
- Key Storage
- Key Usage
- Key Compromise policy
- Keyholder Grant/ Revoke Policy and Procedures
- Third-party audits
- Data Sanitization Policy
- Proof of Reserve
- Log Audits
Crypto Exchanges
Some of the more popular exchanges in the U.S. include:
- Coinbase
- FTX.US
- eToro
- Kraken
- Gemini
- Crypto.com
- Binance.US
- CEX.IO
- Swan Bitcoin
- Coinmama
Cybersecurity may take a backseat to company profit and growth, and instances of crypto theft are increasingly common.
How secure are crypto systems? Judging by the huge number of data breaches announced each year, it is safe to say online privacy and crypto security needs some improvement on several fronts.
Crypto Wallets at Risk
Consumers who own crypto often seek out various ways to protect their assets, and many own wallets sold by a variety of companies. Trezor Company and SatoshiLabs are two such companies that sell an offline hardware cryptocurrency wallet called the Trezor.
Cryptocurrency wallets ostensibly allow individuals to securely store cryptocurrency until they sell or transfer it. The Trezor is meant to provide an internet-based portal called the Trezor Suite, which allows users to access their own wallet to make transactions. According to plaintiffs, this wallet, and others, are not as secure as they are supposed to be.
In April 2022, users of the Trezor platform received a phishing email from hackers who gained access to Trezors’ customer email list, which contained a vast amount of personal information. The related crypto was compromised and in some cases, it has been stolen.
Class Action lawsuits claim that some Crypto companies have disregarded their consumer rights by negligently failing to take adequate and reasonable security measures. They have not ensured that their data systems are protected, and result in crypto theft and data breach incidents.
Crypto Exchange negligence can be the basis for class action lawsuits, and The Lyon Firm aims to protect consumer rights. If you have been the target of crypto theft, personal data misuse or data privacy violations, call for a free consultation. You may be eligible to join existing data privacy class actions and compensation may be available.
