The regulator suggests standardizing the measures used by exchange houses. The report calls for regulations on security among social media companies.
A report from the New York Department of Financial Services (DFS) highlighted six anti-fraud practices among bitcoin exchanges that need to be under inspection and a standardization process. The entity made the list of security measures regarding the Twitter hack that occurred in July.
The DFS validated the measures that the exchanges applied during the hack to the social network but added other recommendations to minimize the possibility of users compromising funds in the future.
The action protocol to mitigate potential scams includes: blocking cryptocurrency addresses associated with scammers, restrictions of transactions only to pre-approved addresses, and the improvement of the marketing of their promotions for they do not appear as potential fraud.
The other three elements are: educating users to detect scams, detect new modus operandi, and share information with other companies in the bitcoin ecosystem.
The department was clear in saying that companies related to bitcoin and cryptocurrencies should not run promotions and contests that look like common scams. Besides, educational campaigns should be conducted to prevent new fraud.
When it comes to detecting new scam methods, the DFS suggests that exchanges keep an “active watch” to identify new trends. Regarding the exchange of information between the exchange houses, it is recommended to do it at all times, but with special emphasis on critical moments.
Exchanges are executing measures to create a regulated environment.
The DFS indicated that up to 15 companies related to bitcoin and cryptocurrencies blocked operations, while another seven did not. Being in its regulatory jurisdiction, the entity detailed how Coinbase, Square, Gemini, and Bitstamp handled the situation.
In total, the four exchanges blocked more than 6,000 attempted transactions worth approximately $ 1.5 million. The destination of the funds was the addresses that the hackers disclosed through the social network.
The regulator indicated that this served to demonstrate the degree of “maturity” that exists in the New York cryptocurrency market. Also, he explained that companies were impacted in two ways: by the hacking of their Twitter accounts and by the risk that their clients would be tricked into sending funds to criminals.
It is important to mention that the Twitter accounts of the Binance, Bitfinex, and KuCoin exchanges were also compromised by hackers. However, in this case, these are companies that are regulated in other jurisdictions, so they were not included in the report.
The report leaned on the performance of exchanges but also called for attention, saying that vulnerabilities are still latent on social media. For this reason, the investigation requests the implementation of regulations on security when it comes to social media.
The Twitter hack affected the accounts of Elon Musk (Tesla), Bill Gates (founder of Microsoft), Jeff Bezos (Amazon), Barack Obama (former president of the United States), and that of the presidential candidate of the United States, Joe Biden.
By: Jenson Nuñez.
