What risks do cryptocurrency trading platforms face?
Cryptocurrency trading platforms are an important part of the cryptocurrency industry chain. It connects the primary and secondary markets of blockchain investment, as well as project parties and ordinary investors. It provides users with a place to buy and trade cryptocurrencies. However, currently, in the still-developing cryptocurrency industry, trading platforms face many risks.
First, there are risks in the platform itself. First, in terms of security, since cryptocurrency trading platforms hold a large number of digital assets and control trading channels, they have become the first choice for hackers. As of the end of last year, the market capitalization of NEM, one of Japan's largest digital currency exchanges, reached US$530 million. The theft has become the largest cryptocurrency theft to date; in addition to directly stealing cryptocurrency, hackers may also use the platform's assets to influence the market and profit from it. In March this year, the Binance system was hacked. They first converted all the tokens in the stolen accounts into Bitcoin, triggering panic selling in the market. They then used these Bitcoins to increase the price of the VIA token 100 times. The second is platform technical failures, including website downgrades, transaction interruptions, etc. In May 2017, due to a system failure, Bitcoin's maximum decline exceeded 20%.
Secondly, there are policy risks in supervision; currently, cryptocurrency trading platforms not only have hidden security risks, but also cryptocurrency has obvious speculative attributes and violent price fluctuations, so it has received close attention from regulatory agencies in various countries. In September last year, domestic trading platforms were cleaned up and most of them closed, resulting in a market downturn.
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