Moscow-based cybersecurity solutions provider Group-IB has devised a scoring model meant to grade crypto exchanges based on the level of security they have in place.
Group-IB has developed the scoring model in collaboration with Swiss insurance broker APIS AS’s CryptoIns. The grading system is based on CryptoIns’ new crypto exchange insurance, which allows users to cover up to 15 BTC worth of digital assets kept in their exchange accounts. Through the scoring model’s data, CryptoIns can compute rates for their coverage, which depends on a crypto exchange’s level of security and asset-protection measures.
This insurance coverage is for assets kept on popular crypto exchanges such as Binance, OKEx, Kraken, and Huobi. A complete list is available on CryptoIns’ website.
CryptoIns Founder and CEO Timofey Volkov elaborates by saying:
“Currently, approximately 3,600,000 BTC are stored in user accounts on cryptocurrency exchanges, making this market highly attractive for hackers.”
According to a September 17 article published on Forbes, hackers are drawn into crypto exchanges because of their design. Crypto exchanges share a similar weakness, which makes them susceptible to the same issues that threaten millions of web applications all over the world. This makes Group-IB’s assessment interesting for investors.
Group-IB’s grading has put into consideration the exchanges’ architecture and infrastructure to be able to have a better grasp of the mechanisms involved in thwarting potential threats.
Amidst an ongoing development for its insurance policy’s framework, CryptoIns discloses that it has evaluated several exchanges employing different parameters, including “the level of technical security [and] the reliability of key storage, password, and personal data of customers provided by each exchange.”
Volkov describes the challenges for insurers in the cryptocurrency industry, adding:
“Collaboration with one of the leading international cybersecurity companies will help us organize and conduct pre-insurance evaluations of the exchanges in order to assess their security, as well as the potential for fraudulent activities on the part of the founders and management.”
CryptoIns’ scoring has also categorized the exchanges into four risk groups depending on the collected information, including “assessment of traded volume, traders’ activity, internal fees and other characteristics.” Exchanges that have made their way to the first group have been determined as the least vulnerable, while exchanges in second and third categories are “rated satisfactory and low in security risk,” and those in the fourth group are considered to be extremely risky, with the security provider claiming it will never provide insurance for such exchanges.
The report indicates that base insurance rates are set at 2.5 percent each quarter and groups are entitled to a variety of discounts to as much as 50 percent.
CryptoIns’ insurance calculator posted on its website ranks San Francisco-based crypto exchange Kraken as the safest digital asset platform while insuring assets at a lower cost. For every BTC held on Kraken will cost users 0.0125 at a 1.25 percent insurance rate. Meanwhile, 1 BTC is slated to be insured on Binance and Bibox for 0.019 BTC and 0.025 BTC, respectively.
Making it to the extremely risky group are exchanges like Yobit, which has been deemed as the least secure. According to the list, other less-secure exchanges are identified as Zaif, Bitstamp, Bit-Z, and TopBTC.