What Is The Main Risk Associated With A Cryptocurrency Hot Wallet?
What Is The Main Risk Associated With A Cryptocurrency Hot Wallet?
Seychelles based crypto exchange Poloniex is added to the list of non-authorised companies set out by the Financial Conduct Authority (FCA) in the United Kingdom. The exchange is one of three companies affiliated with Justin Sun, also one that has suffered from an attack.
The FCA published a warning regarding Poloniex’s operations, saying “this firm may be promoting financial services or products without our permission. You should avoid dealing with this firm.” While the financial authority doesn’t offer a rationale foe the warning, it notes that it is “ot authorised” and “may be targeting people in the UK.”
In the FCA’s warning, it also notes that there won’t be the access to the Financial Ombudsman Service nor protection of the Financial Services Compensation Scheme (FSCS) if something goes awry, which could refer to an attack or if the firm goes out of business.
In early November, Poloniex suffered an attack that saw hackers take $100-million in investor funds. According to the exchange, the restorations to come back from the hack are almost complete. Withdrawals and deposits were suspended, and the exchange was preparing to resume operations at the end of November.
Poloniex resumed operations in the first week of December. These, however, are only for specific cryptocurrencies via the Tron network, including Tether, BitTorrent, Sun Token, Just, Just Stablecoin and USD Coin.
Justin Sun’s exchange attacks
In September, Sun’s exchange HTX (formerly Huobi) faced an $8 million attack with $30 million lost in a hot wallet breach just a few months later.
HTX’s Heco Chain Bridge, a gateway to transfer assets between the exchange and other networks, was vulnerable to hackers and $86.6 million in assets was sent to suspected malicious addresses.
Companies that are legally operated, approved by the UK FCA
The FCA has received 291 applications from cryptocurrency firms looking to register. Of those, only 38 have been approved. In contrast, October saw 140 firms – including HTX – placed on the warning list.