Slope Hack Empties Thousands of Solana Wallets, Who Offers a Safer Alternative?
A security breach linked to the wallet provider Slope has left thousands of Solana users with empty wallets. While details are still unfolding, the end result is yet another blow to crypto holders due to what is likely poor security practices by the wallet provider.
Every time one of these major headline-generating incidents occurs, more and more crypto users are left wondering if their assets are safe. And calls from industry figures appear telling users to move their assets to their exchange or a hardware wallet.
Binance CEO Changpeng Zhao said: “There is an active security incident on Solana… For remediation, send the funds to a cold wallet or CEX like Binance,” followed by similar statements from other exchanges like OKX and KuCoin.
Now, moving your funds to a hardware wallet (cold wallet) is widely considered one of the safest crypto storage methods, but users who regularly trade often hold significant portions of their portfolios on exchanges. So this begs the question, are platforms like Binance or KuCoin really your best option when holding assets on an exchange?
Exchange security and user asset legitimacy
Considering that every exchange’s approach to asset security, and its history, is different, it’s essential to know what differentiates them. Take proof-of-reserves, for example, where an exchange provides proof that it actually holds all of its users’ crypto assets, meaning they are ready and available at any time. In addition, what does the exchange’s security history look like?
A prime example would be Gate.io, a cryptocurrency exchange operating since 2013 that boasts zero asset compromises in its nine-year history. This makes it a gem among the top exchanges, whereas some others have experienced significant past incidents of user assets being stolen.
Tom Yang, EVP at Gate.io, said, “The recent event affecting Solana users is very concerning and, unfortunately, not an isolated incident in the space. At Gate.io, we’ve always put user asset security as our top priority, and it shows with our uncompromised decade-long history. Users are protected regardless of if they store assets on our platform or our hardware wallet.”
Asset security goes beyond protection from breaches
Protection from bad actors is not the only factor. For example, many exchanges have halted withdrawals in times of high market volatility or during a solvency crisis, preventing users from transferring their own crypto.
Gate.io stepped up when it became the first in the industry to have a certified third-party firm conduct a proof-of-reserves audit where users could independently verify their own account asset data, which means that its users’ assets are genuinely held by the exchange and available at all times. Further, they are in the process of a new audit that is soon to complete.
Keeping wallets offline
Users who don’t hold their crypto on an exchange are likely to use some form of crypto wallet, whether a software or hardware wallet. As previously mentioned, using a hardware wallet is widely considered one of the safest crypto storage methods, and this recent Slope incident is a prime example of the pitfalls of software wallets. If users had stored their crypto in a hardware wallet, the private keys would be inaccessible to bad actors, which would have prevented the theft.
This is another area where Gate.io excels. The exchange has its own in-house developed hardware wallet, the Wallet S2. This device allows crypto users to store their private keys offline, in cold storage, without exposing the keys to external devices or hackers. It also features a unique fingerprint sensor for easy, quick, and secure unlocking. Lastly, it supports thousands of cryptocurrencies, both mainstream like BTC and ETH, and layer-2 tokens, with access to a wide array of DeFi applications.
Overall, in the case of Slope, it claimed to be non-custodial, meaning that users’ private keys or seed phrases were not stored in any centralized server. Unfortunately, this seems to have not been the case, as thousands of wallets were compromised en masse. If you are to store your crypto off an exchange, a hardware wallet like Gate.io’s Wallet S2 is a much more viable option.
And when you hold your crypto on an exchange, consider the lengths your exchange will go to in securing your assets, including protection from theft and protecting your ability to withdraw and access your assets at any time.