Key Takeaways

• – Robust Security Measures: XT.COM employs 2FA, cold storage, reserve funds, and penetration testing to safeguard user assets.
• – November 2024 Breach Response: Despite a $1.7 million breach, XT.COM halted withdrawals, assured users their funds were safe, and launched an investigation to prevent future incidents.
• – Industry Context and Recent Attacks: The ByBit $1.5 billion hack, as well as exploits at Phemex and WazirX, highlight how hackers (including the Lazarus Group) are now targeting multi-signature “cold storage” solutions with advanced UI-deception tactics.
• – Comparison with Binance: CZ (Binance co-founder) advises pausing withdrawals in a breach to assess damage, praising transparent CEOs while emphasizing that no security measure is absolute.
• – Future Security Enhancements: XT.COM plans to implement Merkle Tree Proof of Reserves, improve wallet security, enhance multi-sig oversight, and strengthen cybersecurity collaborations.

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Cryptocurrency trading has grown rapidly, attracting both investors and cybercriminals. Exchanges must have strong security to protect funds, preserve trust, and meet regulatory demands. Founded in 2018 and registered in the Seychelles, XT.COM lists over 1,000 digital assets and works continuously to strengthen its security posture. This article examines XT.COM’s security measures, its November 2024 breach, and future user protection strategies—alongside historical hacks for perspective.

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Table of Contents

Why Exchange Security Matters

A Snapshot of XT.COM

Key Security Measures at XT.COM

• – Two-Factor Authentication (2FA)
• – Cold Storage Solutions
• – Reserve Insurance Fund
• – AML and KYC Procedures
• – Penetration Testing and Bug Bounty Programs

The November 2024 Security Breach

• – Immediate Actions and Containment
• – Investigation and Lessons Learned

Recent Industry-Wide Hacks: ByBit, Phemex, and WazirX

Historical Crypto Exchange Breaches: Putting it All in Context

Comparing Response Strategies: XT.COM vs. Binance

Planned Security Upgrades

• – Merkle Tree Proof of Reserves
• – Ongoing Infrastructure Improvements
• – Collaboration with Cybersecurity Firms and Law Enforcement

Tips for Users: Bolstering Personal Security

Balancing Innovation with Risk Management

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Why Exchange Security Matters

Exchanges often hold large sums of cryptocurrency, making them prime targets for hacking attempts. A single breach can trigger massive financial losses, erode user confidence, and harm the entire crypto ecosystem. Regulators worldwide also expect thorough AML/KYC compliance to combat money laundering and other illicit activities.

As a rapidly expanding platform, XT.COM invests heavily in security audits, real-time defenses, and reserve mechanisms. However, recent high-profile hacks—particularly ByBit’s $1.5 billion exploit—illustrate how quickly hacking tactics can evolve. Exchanges must remain vigilant, continuously updating protocols, training staff, and incorporating best practices from the broader industry.

Image Credit: Token Metrics

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A Snapshot of XT.COM

LLaunched in 2018 under Seychelles registration, XT.COM quickly attracted traders by listing more than 1,000 digital assets, from major cryptocurrencies (Bitcoin, Ethereum) to emerging tokens.

Key Features:

• – User-Friendly Interface: Welcomes both newcomers and seasoned traders.
• – Diverse Trading Options: Offers numerous trading pairs and advanced features.
• – Competitive Fees: Designed to support retail and high-volume traders.
• – Customer Support: A help center, email, and live chat assistance.

While these features foster growth, robust security remains XT.COM’s primary focus, aided by multi-layer authentication, strict storage protocols, and ongoing third-party audits.

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Key Security Measures at XT.COM

Two-Factor Authentication (2FA)

Among the most straightforward yet powerful security strategies is Two-Factor Authentication (2FA). XT.COM supports various 2FA options, including:

• – Google Authenticator: An app-based system that generates time-sensitive login codes, significantly reducing the risk of account hijacking.
• – SMS and Email Verification: Users receive codes via text message or email, adding another authentication layer.

While Google Authenticator often provides better protection against phishing and SIM-swap attacks, enabling any form of 2FA is better than none. XT.COM urges all users to activate at least one 2FA method immediately after creating their accounts. Consistently reviewing and updating 2FA settings can also help mitigate the effects of potential device compromises.

Cold Storage Solutions

XT.COM stores the majority of user assets in cold wallets, meaning these wallets remain offline and inaccessible to hackers who target internet-connected “hot” wallets. By limiting the number of funds held in hot wallets—used primarily for daily transactions and withdrawals—the exchange significantly reduces the risk of large-scale theft.

Implementing cold storage effectively requires:

• – Secure Facilities: Physical hardware or air-gapped computers located in protected environments.
• – Access Restrictions: Strict protocols that limit the number of staff members with clearance to handle private keys.
• – Regular Audits: Frequent checks to confirm the integrity and availability of stored assets.

Though cold storage sometimes slows down withdrawals (because funds need to be moved from offline to online wallets), it remains a widely recognized best practice within the crypto industry.

Reserve Insurance Fund

Another critical layer of XT.COM’s security strategy is its reserve insurance fund, designed to protect user assets and maintain liquidity in emergency scenarios. The exchange keeps reserves that are 1.5 times the total value of user deposits, ensuring that even if unforeseen events occur, users’ funds can be covered.

This extra liquidity offers reassurance:

• – Emergency Coverage: In the event of a cyberattack or unexpected market event, XT.COM can tap into this fund to compensate losses.
• – Mitigated Risk: By safeguarding against drastic financial shocks, the exchange preserves a stable environment for its users.

Although reserve funds can’t prevent a security breach on their own, they help cushion potential losses and demonstrate XT.COM’s commitment to user protection.

AML and KYC Procedures

To comply with global regulatory standards and deter illegal activities, XT.COM enforces strict Anti-Money Laundering (AML) and Know Your Customer (KYC) policies. Users typically must:

• – Submit personal identification documents (passport, driver’s license, or ID card).
• – Provide proof of residence or other relevant documentation if needed.
• – Undergo continuous monitoring for suspicious transactions.

These measures aim to identify and block fraudulent activities, such as money laundering and terrorist financing. While AML and KYC protocols add steps to the account creation and transaction processes, they boost overall security by creating a safer environment for legitimate traders.

Penetration Testing and Bug Bounty Programs

CER.live, a platform that rates the security of cryptocurrency exchanges, assigns XT.COM a score of 76 out of 100. Part of this score reflects the exchange’s investments in ongoing penetration testing and bug bounty programs:

• – Penetration Testing: Professional teams simulate attacks to discover vulnerabilities before hackers can exploit them.
• – Bug Bounties: By offering financial incentives, XT.COM encourages independent security researchers to report weaknesses.

These measures keep XT.COM informed of emerging risks and allow the exchange to stay a step ahead of potential attackers.

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The November 2024 Security Breach

Despite these precautions, XT.COM encountered a significant breach in November 2024, resulting in the unauthorized transfer of about $1.7 million worth of cryptocurrencies. The stolen assets were converted into 461.58 ETH (Ether) and withdrawn to an external wallet.

Immediate Actions and Containment

Once the breach was detected, XT.COM’s immediate response was to halt all withdrawals, preventing further losses. This swift action likely reduced the potential damage a prolonged attack might have caused.

XT.COM swiftly assured the community that the stolen funds belonged to the platform’s reserve account rather than individual user wallets. This distinction meant that no user balances were directly affected. The exchange also promised a full investigation while reinforcing that its reserves exceeded user assets by 1.5 times, ensuring the platform remained financially stable.

Investigation and Lessons Learned

After containing the breach, XT.COM launched a comprehensive investigation with assistance from cybersecurity experts and possibly law enforcement. The goal was to:

• – Identify Vulnerabilities: Determine how the attacker managed to extract funds from XT.COM’s system.
• – Prevent Recurrences: Patch security gaps and strengthen operational protocols.
• – Maintain Transparency: Keep users and stakeholders informed about the findings, building trust through open communication.

Though the breach was relatively minor compared to industry-wide incidents, it underscored the need for continuous improvements and quick, decisive action.

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Recent Industry-Wide Hacks: ByBit, Phemex, and WazirX

Multi-Sig Under Siege

In the ByBit $1.5 billion hack, hackers—allegedly the Lazarus Group—exploited a multi-sig cold wallet by deceiving the front-end user interface. Users (and the system) saw a “legitimate” transaction, while the actual signing process directed funds to the attackers’ addresses. Similar exploitation methods have reportedly affected Phemex and WazirX.

Advanced Attack Vectors

What makes these hacks particularly concerning is that different multi-sig providers were compromised. It remains unclear whether attackers bypassed hardware devices, server infrastructure, or both. The sophistication of these breaches serves as a wake-up call across the industry.

CZ’s Perspective

Responding to ByBit’s situation, CZ (Binance co-founder) suggested pausing withdrawals to “make sure we fully understand what happened” and to prevent ongoing theft. He noted that while halting withdrawals can cause panic, taking time to investigate thoroughly has proven beneficial in past scenarios (e.g., Binance’s 2019 $40 million hack). CZ also praised transparent communication during security incidents, contrasting it with more opaque responses from other platforms.

Image Credit: CZ Official X (Twitter)

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Historical Crypto Exchange Breaches: Putting XT.COM’s Incident in Context

Although any security breach is a cause for concern, it’s helpful to view XT.COM’s November 2024 incident against the backdrop of much larger crypto exchange hacks. Over the past decade, several major platforms have experienced cyberattacks that resulted in significant losses:

• – Mt. Gox (2014): Often cited as the most infamous hack in crypto history, Mt. Gox lost around 850,000 BTC—worth hundreds of millions of dollars at the time (and billions at today’s valuations).
• – Coincheck (2018): The Tokyo-based exchange suffered a loss of approximately $530 million in NEM (XEM) tokens, making it one of the largest single hacks ever recorded.
• – KuCoin (2020): Hackers stole an estimated $275 million in various cryptocurrencies from KuCoin, although the exchange managed to recover a portion of the funds.
• – Poly Network (2021): In a cross-chain protocol hack, attackers made off with over $600 million in digital assets. The funds were mostly returned after negotiations, but it remains a standout example of how DeFi platforms can be exploited.

These breaches, each ranging from hundreds of millions to billions of dollars in value, underscore how severe cyberattacks can be in the cryptocurrency space. While XT.COM’s breach of $1.7 million is still serious, it stands at a much smaller scale compared to these high-profile incidents. Even so, XT.COM responded quickly to contain the situation, demonstrating its readiness to manage and mitigate security risks despite the relatively modest size of the breach.

Image Credit: Bitcoin.com

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Comparing Response Strategies: XT.COM vs. Binance

Withdrawal Freeze

• – XT.COM: Halted withdrawals immediately after detecting its breach, then resumed once security was restored.
• – Binance: Similarly froze withdrawals for a week in 2019 after a $40 million hack. Interestingly, subsequent deposits outweighed withdrawals upon reopening, reflecting user trust.

Communication and Transparency

• – XT.COM: Repeatedly reassured users, clarifying that the platform’s reserve fund absorbed the impact.
• – Binance (CZ): Stresses direct communication, praising honest leadership. He also emphasizes that every scenario is unique, and each CEO must decide the best course of action based on real-time information.

Reserve Funds

• – XT.COM: Maintains a 1.5x reserve, ensuring solvency under extreme conditions.
• – Binance: Has a dedicated SAFU fund used to backstop user funds during emergencies.

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Planned Security Upgrades

Merkle Tree Proof of Reserves

XT.COM will implement a Merkle Tree Proof of Reserves system, letting users independently verify on-chain assets without revealing sensitive information. This transparency fortifies user confidence in the exchange’s solvency.

Ongoing Infrastructure Improvements

Strengthening Multi-Sig Protocols

• – Leveraging lessons from the ByBit hack, XT.COM will refine multi-sig processes to minimize UI-level exploits and strengthen offline key management.

Real-Time Threat Detection

• – Deploying advanced firewalls and intrusion detection akin to Binance’s AI-driven approach, aiming to spot anomalies (e.g., unusual transaction patterns) instantly.

Access Controls and Training

• – Tightening staff permissions and conducting routine social engineering drills to prevent insider threats.

Collaboration with Cybersecurity Firms and Law Enforcement

– Sustain a bug bounty program, encouraging community researchers to disclose vulnerabilities before malicious actors exploit them.

– Partner with specialized cyber defense firms to maintain a rotating schedule of penetration tests.

– Cultivate law enforcement alliances globally, as recommended by CZ, to expedite fund recovery when thefts occur.

Image Credit: BitPanda

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Tips for Users: Bolstering Personal Security

Even a highly secure exchange relies on users to protect their own accounts:

• – Enable 2FA: Preferably use Google Authenticator for extra resistance to phishing.
• – Use Strong, Unique Passwords: Avoid reusing credentials across multiple sites.
• – Beware Phishing: Verify suspicious links and domain names before clicking.
• – Monitor Activity: Check login histories, trades, and withdrawals regularly.
• – Stay Informed: Follow official XT.COM announcements and reputable industry voices (such as CZ) for timely security updates.

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Balancing Innovation with Risk Management

The November 2024 breach at XT.COM, combined with recent multi-sig exploits (ByBit, Phemex, WazirX), underscores a universal truth: even robust measures are not immune to evolving hacker tactics. Constant adaptation and a willingness to pause operations temporarily—when necessary—are critical for identifying attack vectors and preventing further damage.

Ongoing developments like Merkle Tree Proof of Reserves, more sophisticated multi-sig oversight, and AI-driven fraud detection showcase XT.COM’s commitment to proactive security. Ultimately, an exchange’s reputation hinges on both its ability to protect users and its transparency when issues arise. By adopting best practices from Binance and other leading platforms, XT.COM ensures it remains steadfast in its mission: protecting user funds while facilitating broad access to digital assets.

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About XT.COM

Founded in 2018, XT.COM now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM crypto exchange supports a rich variety of trading, such as spot trading, margin trading, and futures trading together with an aggregated NFT marketplace. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.