A secure crypto exchange must have a few key factors that guarantee the safety and protection of your assets. Regardless of the platform, security protocols and protection measures are vital for the success of a crypto exchange.
Binance, one of the world’s leading crypto exchanges is not innocent of hacking attempts on its network. Back in 2022, they were hit with a major hack that stole over $570 million in crypto assets. Since then, the exchange has done its best to tighten security measures and retrieve the stolen assets. In 2024, Binance has been able to return about $73 million of stolen funds and has made enhancements to its security structure.
With no online exchange able to guarantee 100% safety and security, we are going to review Binance’s updates and help to answer “Is Binance safe?”
Security Features of Binance
Two-factor authentication (2FA): 2FA is a key security feature to protect user accounts on the Binance exchange. This means you must provide two forms of identification to access your account, like a password combined with a verification code. This feature is not mandatory but utilizing it is highly recommended since it helps to reduce the risk of account hacks.
Cold Wallet Storage: Binance is compatible with many cold wallets to minimize your crypto’s exposure online. Compared to hot wallets, which store all of your private keys and information online, cold wallets are completely disconnected and therefore the safest place to store crypto.
Binance SAFU Fund: The Secure Asset Fund for Users (SAFU) is an emergency fund established by Binance in 2018. It functions by having the exchange allocate 10% of all trading fees to this fund, which is then used to reimburse users if a breach or hack leads to asset loss. It is like an insurance policy to help return your funds if the network is hacked.
Encryption and Security Layers: Binance uses advanced encryption protocols that protect your sensitive information like login details, financial transactions, and personal data. This makes it more difficult for your info to be leaked if there is a hack.
There are additional measures such as firewalls, threshold signature schemes (TSS), and whitelistings to provide further security.
Binance in 2024
Since the start of 2024, Binance has had several security concerns. The most alarming was when Binance’s real-time monitoring system identified over $2.4 billion in potential user loss. Luckily, this stopped over 1.2 million global users from falling victim to phishing scams and fake withdrawals.
However, Binance is still in an ongoing security battle with external hacks.
In July of 2024, Binance was able to recover about $73 million in stolen funds but still begs users to question “How safe is Binance?” – Sure, the exchange is aiding in recovery, but what is permitting hackers and scammers from accessing the exchange in the first place?
Regulatory Issues
In 2024, Binance has continued to face scrutiny from global jurisdictions. Countries like the US, UK, and European member states have implemented stronger crypto regulations and placed Binance under fire for allegedly functioning without proper licenses in certain regions.
The fact that Binance does not claim a clear headquarters – as the Malta Financial Services Authority (MFSA) has clearly stated that Binance cannot operate in Malta – has made many regulatory institutions question the company’s legal structure.
Additionally, Binance’s CEO, Changpeng Zhao, has stepped down. He has led Binance since the company’s start. His resignation came as regulatory pressures and allegations of non-compliance in multiple countries have been under scrutiny.
Binance’s Security Versus Other Crypto Exchanges
Binance is one of many big names in the crypto exchange space. There are plenty of others that global users prefer. Here are some popular choices and how they stack up against Binance:
Binance vs. Coinbase
These exchanges are widely known but have notable differences, especially in their security features. While both exchanges are compatible with cold wallets, Binance uses a multi-tier security system, such as 2FA and SAFU, and Coinabse offers compliance with regulations. Coinbase’s level of transparency, especially within the US has led them to obtain insurance policies to protect user funds.
Binance vs. Kraken
Both exchanges implement 2FA but, Kraken has additional strengths in hardware security keys. The Master Key prevents unrequested password resets, even if your email account is compromised. In regards to compliance, especially in the US, it follows strict regulations such as anti-money laundering policies and claims its Proof of Reserves to US audits. Binance, on the other hand, has faced more challenges with regulations.
Why You Should Use a Cold Wallet for Storing Your Crypto
Using a cold wallet is one of the safest ways to store your cryptocurrency. Unlike online hot wallets, which are connected to the internet, cold wallets are offline and inaccessible to hackers. This makes them ideal for storing large amounts of crypto that you don’t plan to trade frequently.
Leaving large amounts of cryptocurrency on an exchange has many risks, regardless of how many security features and protocols are set in place. For example, while exchanges like Binance and Coinbase offer security protection, there have been many instances of hacks that resulted in large losses.
To protect your assets fully, moving them to a cold wallet is your best choice.
Material Bitcoin is an excellent cold hardware wallet solution. It’s designed to give you maximum protection while remaining user-friendly. It is easy to use and the best way to safeguard your crypto offline.
Is Binance a Safe Choice for You?
When deciding which exchange to use, there are a few factors to consider:
1️⃣What Kind of Crypto User Are You?
Are you looking to frequently trade your crypto or are you buying and holding Bitcoin as a long-term investment? Advanced traders might benefit more from using Binance as it provides access to over 350 cryptocurrencies and facilitates fast trades. While those looking to HODL crypto are better off securing their assets in a cold wallet.
2️⃣What Is Your Risk Level?
It is important to understand your risk tolerance and feel comfortable with leaving your crypto on an exchange. As regulations can change quickly, so can what it means for your funds sitting on the exchange.
Final Takeaway
Whether you’re a beginner or an advanced trader, it’s important to assess your risk tolerance, consider practical security steps like using a cold wallet, and stay informed and updated about platform developments.
Binance can be a great choice if your priority is trading, but keep in mind that anything online, regardless of its robust security features, will always be a sitting duck for crypto hackers.
FAQs
What Happens If Binance Is Hacked?
- If Binance is hacked, it uses its SAFU fund, a $1 billion reserve, to reimburse users for any losses caused by the breach. This can take time to reimburse victims and also doesn’t protect against other information being leaked.
How Does Binance Handle Security Breaches?
- Binance monitors threats in real time using AI and manual reviews. If there is a breach, they freeze accounts or transactions until the issue is resolved.
Is Binance Safe for Beginners and Experienced Traders?
- Binance is suitable for both, though beginners may find it complex.
Can I Recover Funds if My Binance Account is Compromised?
- Binance has recovery protocols and the SAFU fund for security breaches.
Does Binance Comply with Global Regulations?
- Binance has faced scrutiny in regions like the U.S. and Europe. It’s taking steps to collaborate more with regulators in 2024.
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