Jesse Powell, the CEO of a major crypto exchange Kraken, warned users of digital assets to not store funds on trading platforms.
The warning of Powell follows a high profile security breach suffered by Cryptopia, a New Zealand-based crypto exchange known for its listing of a wide range of small market cap tokens.
Any application or platform connected to the internet by nature is hackable. In essence, centrally operated crypto exchanges are similar to banks in that they hold the private keys and funds of users.
If a hacker gains access into the central servers or internal management system of an exchange, the hacker can steal user funds, private information, and financial data.
As Powell said, a more secure way of storing cryptocurrencies is in a hardware wallet or a non-custodial wallet that allows users to manage their own private keys. “Please do not store more coins on an exchange (including @krakenfx) than you need to actively trade. Use Ledger or Trezor. DEXes are not a panacea — look at the DAO. Open source just means exploits will be discovered sooner (probably not by good guys),” he noted.