In the world of cryptocurrency, security is always a sword of Damocles hanging over your head. In February 2025, a well-known cryptocurrency exchange suffered an attack that shocked the industry, resulting in the theft of a large amount of assets, triggering a deep reflection on the security of cryptocurrency exchanges around the world.
This incident is not an isolated case. It reveals the deep-seated problems of the entire industry in terms of technology, management, collaboration and user protection. This article will explore the security status and future development direction of cryptocurrency exchanges from these four dimensions.
Technical defense: the limitations of cold wallets and multi-signature mechanisms
In this incident, hackers successfully broke through the defense of the multi-signature cold wallet by forging executive instructions and tampering with the front-end interface. This incident prompted the industry to re-examine the security standards of cold wallets. As a safe for storing cryptocurrency, the security of cold wallets has always been considered the highest standard in the industry. However, this theft incident shows that cold wallets are not absolutely safe, and the real key lies in the combination of technical means and internal management.
From a technical perspective, the security of cold wallets relies on technologies such as multi-signature, offline storage, and hardware security modules (HSM). However, technical means are not foolproof. Hackers can bypass the protection of cold wallets through technical loopholes or social engineering attacks. Therefore, the security of cold wallets needs to be strengthened from the following aspects:
The upgrade of the multi-signature mechanism is the key. Although the traditional multi-signature mechanism increases the difficulty of attack, it does not fundamentally eliminate the risk. Cold wallets must follow the principles of off-site backup, bank custody, multiple storage media, multiple signatures, and complete offline, while introducing more complex signature algorithms such as threshold signatures and multi-party computing (MPC). These measures can ensure that even if some keys are leaked, the assets are still safe.
In-depth auditing of smart contracts is crucial. In this incident, hackers induced multi-signature authorization by tampering with the front-end interface. This attack path shows that vulnerabilities in smart contracts may become a breakthrough for hackers. Therefore, strengthening the audit of smart contracts and introducing a combination of automated audit tools and manual audits will help improve the security and transparency of contract codes, thereby reducing potential risks.
The widespread use of hardware security modules (HSM) is an effective means to improve the security of cold wallets. By storing private keys in HSM, it is ensured that the generation, storage and use of private keys are completely carried out in a secure environment, which can effectively prevent the leakage of private keys. In addition, the combination of hardware wallets and biometric technology can further improve the security of user assets.
Management loopholes: prevention and response to internal operational risks
In this incident, hackers took advantage of the operational loopholes of internal personnel, forged instructions to induce multi-signature authorization, and finally completed the attack. This path shows that even if the technical defense line is strong enough, the weak links in internal management may still be exploited by hackers. Therefore, preventing the coupling risk of technology and internal operational loopholes has become a core issue in the security management of exchanges.
In the cryptocurrency industry, deepening the zero-trust security system is the key to preventing internal risks. Adopt the principle of continuous verification, never trust to ensure that all operations are subject to strict identity authentication and authorization. At the same time, introduce role-based access control (RBAC) and the principle of least privilege (PoLP) to limit employees access to sensitive data and fundamentally reduce security risks.
For example, Gate.io ensures transparency and traceability of key operations through strict access control and regular permission review. This measure ensures that only authorized personnel can access sensitive data, reduces security risks from internal sources, and further consolidates the security management system of cryptocurrency exchanges.
Transparency and auditing of operating procedures is another key to preventing internal risks. Exchanges need to establish strict internal operating procedures to ensure the transparency and traceability of key operations (such as cold wallet transfers), and conduct internal audits regularly to promptly discover and fix potential vulnerabilities. In this way, exchanges can ensure that every operation is under strict monitoring to prevent operational errors or malicious behavior by internal personnel.
Employee security training and simulated attack drills are important means to improve internal security awareness. Exchanges need to conduct regular security training for employees to enhance their awareness of social engineering attacks. At the same time, simulated attack drills can also be used to test employees ability to respond to real attack scenarios. In this way, it can ensure that employees can remain calm when facing complex attacks and quickly take correct countermeasures.
Industry collaboration: the necessity and implementation path of cross-exchange security alliance
After the incident, Coinbase, Binance and other exchanges responded quickly and successfully blocked the hacker addresses related to the incident through cooperation and information sharing. This action helps reduce the circulation of stolen assets and the possibility of money laundering, and also demonstrates the great potential of cross-exchange cooperation in responding to security incidents.
In the cryptocurrency industry, industry collaboration is the key to improving the overall security level. The complexity and diversity of hacker attacks have exceeded the response capabilities of a single exchange. Therefore, it is an inevitable trend for the future development of the industry to establish a cross-exchange security attack and defense alliance to improve the overall defense level of the industry by sharing hacker attack feature libraries and coordinating vulnerability bounty programs.
The sharing of hacker attack feature libraries is the basis for cross-exchange collaboration. Each exchange shares known hacker attack features, attack paths, and attack methods in the alliance database, which can effectively help other exchanges to provide early warning and prevent similar attacks.
Collaborative bug bounty programs are an important means of improving the security level of the industry. A bug bounty program led and jointly established by leading exchanges can attract global security researchers to participate and promptly discover and fix potential vulnerabilities. In this way, the industry can fully utilize the power of the global security community to improve the overall security protection level.
Take Gate.io as an example. The platform has long established a bug bounty program to encourage security researchers to report possible security vulnerabilities on the platform. The continuous expansion of security review dimensions is beneficial to the security of exchanges. It enables exchanges to discover and fix potential security issues in a timely manner, further improving the overall security of the platform.
At the same time, the coordination of emergency response mechanisms is also the key to responding to major security incidents. Establishing a unified emergency response mechanism can ensure that when a major security incident occurs, all exchanges can quickly work together to block hacker assets and track the source of the attack. This close cooperation across exchanges not only improves the speed of incident response, but also minimizes losses and effectively combats malicious hacker attacks.
User protection: asset recovery and compensation mechanism in the worst case scenario
Although exchanges have taken a variety of security measures, the complexity and unpredictability of hacker attacks still exist. In the worst case, how to ensure the priority of user asset recovery is a problem that every exchange must face.
Asset recovery priority is the core of user rights protection. When a security incident occurs, the exchange should prioritize the recovery of user assets. By cooperating with blockchain security companies, we can track the flow of stolen assets and make every effort to recover user assets.
In the cryptocurrency industry, the risk reserve mechanism is an important guarantee for the safety of user assets. By establishing a sound risk reserve system, it is ensured that capital losses can be quickly filled in extreme cases. At present, mainstream exchanges all adopt a 1:1 asset reserve mechanism, which is absolutely necessary for users, but transparency and reliability still need time to verify.
Simply put, even if the stolen assets cannot be recovered, the interests of users will not be harmed, which is the significance of the existence of the reserve. In this way, users can get the greatest degree of protection when facing security incidents.
As the frequency of reserve fund data updates of various exchanges increases and the amount of reserve funds continues to exceed, the protection for users is becoming more reliable. It is undeniable that this industrys largest fund theft incident is undoubtedly an important opportunity to strengthen the exchanges security line of defense.
In addition, user education and security advice are important means to enhance user security awareness. Exchanges should regularly issue security tips to users and recommend that users give priority to hardware wallets to store assets and avoid storing large amounts of funds on exchanges for a long time.
Security Outlook from the Perspective of the Whole Industry
Multiple large-scale asset theft incidents have sounded the alarm for the entire cryptocurrency industry. These incidents remind us that security is a systemic problem that needs to be strengthened from multiple dimensions such as technology, management, industry collaboration and user protection.
The cryptocurrency industry is in a stage of rapid development. Security issues are not only a technical challenge, but also the cornerstone of trust. Only through the joint efforts of the entire industry and the continuous strengthening of technology, management and collaboration capabilities can the industry truly mature and win the trust and support of users. In the future, with the advancement of technology and the improvement of industry standards, we have reason to believe that the cryptocurrency industry will become more secure, transparent and reliable.
