Running a cryptocurrency exchange might seem like a fast track to wealth and influence, but behind the scenes, the reality is far more stressful. For exchange founders, the constant fear of cyberattacks looms large—threatening not just their business, but their mental well-being.
From sleepless nights to rethinking security protocols after nightmares, the pressure is relentless. Even industry pioneers like OKX founder Xu Mingxing have faced moments of vulnerability that reshaped their approach to security. This article dives into the hidden challenges of running a crypto exchange, exploring the real risks, psychological toll, and evolving strategies to stay one step ahead of hackers.
The Constant Threat of Hacks
When Bitcoin prices rise, so do the stakes for exchanges. With larger trading volumes come bigger targets. As PeckShield vice president Wu Jiazhi explains, hackers are sophisticated players who understand market timing. "After Bitcoin surpassed $8,000, we saw dormant hacker addresses reactivate—transferring stolen coins through multiple wallets before cashing out on exchanges."
The numbers are alarming. According to SlowMist, over ten exchanges—including major platforms like Binance and Coinbase—were successfully attacked in Q2 2019 alone, resulting in losses exceeding $76 million. While large exchanges can absorb such blows, smaller ones often collapse under the weight.
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Many small exchange founders operate under immense stress. One founder reportedly filled a breach from personal funds but suffered severe insomnia afterward, eventually shutting down operations months later. The emotional toll is real: every alert, every log entry could signal disaster.
Living Under the Sword of Damocles
For exchange CEOs, leadership feels less like triumph and more like walking beneath a suspended blade. The legacy of Mt. Gox and Bitfinex—where hundreds of thousands of BTC were stolen—still haunts the industry.
HB.top founder Yao Yuan puts it plainly:
“The two biggest threats to any exchange are hackers and regulatory bans. There’s no such thing as 100% security—only layers upon layers of defense.”
When Binance suffered its high-profile hack in May 2019, CZ’s public response revealed the human side of crisis management. “He looked exhausted,” Yao recalls. “I thought, That could be me tomorrow.”
This pervasive anxiety shapes daily operations. At HB.top, three out of ten team members focus solely on security. Attacks spike during holidays, when vigilance may wane—so round-the-clock monitoring is essential.
Why Trusting Technology—and People—is Hard
Exchanges must maintain liquidity for withdrawals, yet many still rely on manual processes. Some teams gather each morning to jointly authorize transactions—a ritual born of fear.
“Founders tell us they can’t sleep,” says Hai Ze Wang, security lead at SlowMist. “They beg us to double-check everything.”
The paradox? They can’t trust third-party wallets—or even their own developers.
One entrepreneur admitted: “We built our own wallet system because we didn’t trust others’. Then we realized we couldn’t fully trust our own team either.”
High salaries reflect this urgency. Top security experts earn twice the average developer salary—with no ceiling for elite talent. At one point, several SlowMist partners discovered they’d all received offers from the same leading exchange.
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Costs add up quickly. Coinbase’s custodial service charges a $100,000 setup fee plus ongoing fees—only accessible to clients holding over $10 million in assets. For smaller exchanges, these protections remain out of reach.
As one founder tweeted before shutting down: “We simply couldn’t allocate enough resources to security without sacrificing product development.”
Lessons from Real-World Breaches
Most security practices emerge from painful experience. Here are key lessons learned the hard way:
1. Patient Hackers Play Long Games
In May 2019, Binance was compromised after hackers spent months infiltrating internal systems. A similar pattern hit DragonEx and BiKi via the Lazarus Group.
360 Security experts reveal: Lazarus operatives spend up to six months building trust with exchange staff—posing as partners or developers—before introducing malicious trading bots.
“Once they’re ‘friends,’ who suspects them?” says a 360 analyst.
Their patience pays off: Lazarus netted over $4 million from DragonEx alone.
2. Attacks Exploit Human Weakness
Hackers don’t just target code—they target behavior. Many strike during holidays or late-night hours when attention fades.
HB.top’s team stays alert year-round, knowing attackers never rest.
3. Bragging About Security Invites Trouble
Security expert Ken warns against public boasting:
“Say you’re unhackable? Now every hacker wants to prove you wrong.”
True security is silent—measured by uptime and zero incidents, not marketing claims.
4. Not Knowing the Breach Point Is the Worst Case
Post-attack response matters as much as prevention. Some teams discover theft but can’t pinpoint the cause—leading to extended investigations and sleepless nights.
HB.top once lost hundreds of USDT due to a fake deposit attack: hackers exploited a loophole allowing withdrawals before confirming token receipt.
After fixing the flaw—requiring confirmed blockchain confirmations before enabling withdrawals—they stopped further losses. Later, the same method crippled other platforms, costing millions.
“Human error is the weakest link,” says Yao Yuan. “We counter it with strict policies: air-gapped networks, mandatory antivirus, no suspicious links.”
Can Users Really Feel Safe?
Users rarely assess an exchange’s technical security. Instead, they ask one question: Can it afford to pay me back if hacked?
This is where compensation funds become critical. Exchanges like Binance maintain Secure Asset Funds for Users (SAFU), turning breaches into trust-building moments.
“I don’t know if big exchanges are safe,” admits one trader, “but I know they won’t run away.”
Even so, sudden "dark horse" platforms raise red flags. Rapid growth often outpaces security investment—making them prime targets.
Biki and MXC (抹茶) both faced attacks within months of surging in popularity—proof that speed without safeguards is dangerous.
While awareness has improved since 2017—with more using cold storage, multi-sig wallets, and AWS KMS—the truth remains: no system is unhackable.
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Frequently Asked Questions
Q: Are large exchanges safer than small ones?
A: Generally yes—due to greater resources for security teams and insurance funds—but even giants like Binance have been breached.
Q: What is a cold wallet?
A: A cryptocurrency wallet disconnected from the internet, making it far harder for hackers to access funds.
Q: How do fake deposit attacks work?
A: Hackers trick exchanges into crediting non-existent deposits by exploiting timing gaps between transaction initiation and blockchain confirmation.
Q: Do all exchanges compensate users after hacks?
A: Most reputable ones do—but only if they have sufficient reserves or insurance mechanisms in place.
Q: Is full security possible?
A: No. Security is an ongoing process of risk mitigation, not a final destination.
Q: What should users look for in an exchange?
A: Look for transparency about security measures, proof of reserves, cold storage usage, and a history of compensating users after incidents.
The life of an exchange founder isn’t glamorous—it’s defined by vigilance, paranoia, and relentless effort. As long as digital assets hold value, the battle between hackers and defenders will continue. But with smarter systems, better practices, and institutional-grade tools, the industry moves closer to resilience—one secure transaction at a time.