How much crypto users buy is the wrong success metric for a crypto exchange

Exchanges transact billions of dollars in crypto (Easy Crypto has transacted over NZD$3 billion in total sales to date) – but are we pinning our success on the wrong metric? Instead of chasing more and more trades, reputable exchanges should be refusing to take a user’s money when they suspect a user is being taken advantage of or scammed because there’s another far more important number: the amount of money returned to customers dealing with fraud or scams. 

This month, Easy Crypto became the first exchange globally to publicly disclose this number on its website – which now sits at NZ $2,733,738 (returned between July 2022 to April 2024) – following new research revealing that investors want the industry to ‘level up’ in terms of providing a safe, secure investment environment. 

With crypto no longer a ‘fringe asset’, Janine Grainger, Founder and CEO of Easy Crypto, dives into how crypto exchanges can keep customers safe. 

Security isn’t never ‘set and forget’ 

Keeping customers safe involves more than just setting up security measures. Security should be a foundational design principle in terms of an exchange’s products, processes and procedures, but without continuous, ongoing vigilance, an exchange is just a house of cards.

To stay one step ahead of hackers, best practice requires daily monitoring to identify risks as they emerge and take action before customers are affected.

Before making any transactions, users should ensure that an exchange’s approach to security includes key elements outlined below.

Customer identification and verification

Exchanges need to ensure every user is legitimate through stringent Know Your Customer (KYC) procedures which help prevent fraud, money laundering, and illegal activity, creating a trustworthy investment environment.

Additionally, they should comply with global Anti-Money Laundering (AML) regulations, constantly monitoring for suspicious behaviour to protect users from potential threats.

Transaction monitoring

Many exchanges use behavioural analytics and blockchain analytics to monitor trading patterns, flagging unusual activity and stopping potential fraud before it escalates.

Additionally, some will set transaction limits on amounts or their frequency, safeguarding users from significant losses and unauthorised access.

Security measures

Some exchanges will enhance security by requiring Multi-Factor Authentication (MFA) for logins, adding an extra layer of protection beyond passwords. 

Customer education

Education is also a key factor to prevent fraud. Exchanges should prioritise scam awareness, regularly educating users on how to spot fraudulent schemes with resources and updates.

Some of them also offer best practice guidelines on account security – from setting strong passwords to keeping wallet keys safe – and educate users about phishing scams. 

Self-custody

Whilst most exchanges offer ‘custody’ of investor funds, which means that they will hold an investor’s funds for them, others are unapologetically non-custodial meaning users purchase crypto to be sent to their own wallet.

At the heart of this lies a revolutionary approach that emphasises user autonomy and security in which each user becomes their own ‘bank’ and manages their own crypto – ensuring their funds remain secure and independent of third-party platforms.

Fighting fraud – a team effort 

To combat fraud, exchanges should also be working closely with banks in terms of regularly updating the industry’s biggest players on the most recent scams and measures that can be taken to prevent them.

This is critical because each industry operator understands a piece of the larger financial crimes puzzle; and when they pool knowledge, our ability to identify and combat this type of activity improves exponentially. 

There’s no one-size-fits-all solution, but by working together, we can create a safer, more secure crypto environment for everyone.

Openly disclosing fraudulent transactions is a good place to start. Although far less impressive than trading volumes, it is an important alternative ‘success metric’.

Further reading: Read the full story on how Easy Crypto keeps you safe from scammers.

Disclaimer: Investing in crypto carries risk. Always do your own research or seek professional advice. Terms and Conditions apply.