CDx Power Rankings — Crypto Exchange Risk (November 2018)
Binance finishes outside the top 5, Bitfinex ranking surprises many, and Kucoin is deemed high risk.
Since 2011, cryptocurrency exchanges have lost $12.6 billion because of hacks, scams, and regulatory seizures. When this happens, exchange customers usually pay the price.
Yes, $12.6 billion.
At CDx, our mission is to make crypto safer for everyone. Understanding exchange credit risk is hard, so we built a predictive model that provides credit scores and rankings on each exchange’s risk of defaulting because of a hack, scam, etc.
Credit risk is the risk that an exchange is unable to give your money back.
Ranking are determined by four factors
The rankings are based on a combination of factors from four categories (the report and Andrew’s methodology article goes into more detail):
- Cybersecurity — Unsecure exchanges are more likely to get hacked
- Regulatory Risk — Less compliant exchanges are more likely to get shut down
- Track Record of Hacks — Previously hacked exchanges are more likely to get hacked again
- Exchange Volume — High volume exchanges are more likely to repay customers after a hack
Good News: Safe, regulated exchanges are available
Binance and Poloniex are both landed in the top 10, but out of 100 exchanges, only 3 managed to gain a rating of AA or higher.
Although regulated exchanges performed well, the riskiest exchange to store digital assets on was also regulated.
Bad News: Popular exchanges fail basic security practices
A number of popular altcoin exchanges rank in the bottom 25, including Liqui and Cryptopia.
The second most popular exchange by volume ranked outside of the top 20, thanks to a recent hack and weak security practices.
