By Mark Ackman
The fear of vulnerable crypto ecosystems to cyberattacks scared Coinsquare exchange to halt operations temporarily. Announcing the temporary shutdown via November 22 tweet, the Canadian crypto exchange considered the shutdown was necessary to investigate whether unusual activities occurred.
The data breach came a month after Coinsquare was granted a crypto trading license by the Investment Industry Regulatory Organization of Canada (IIROC). Coinsquare cited a data breach detected on November 19 that compromised the privacy of users’ information. In a communication conveyed through its verified Twitter hurdle, the Canadian crypto exchange considered the November 22 maintenance window to facilitate the completion of system updates to restore the functionality of web and mobile applications.
Third-Party Access Leaked Database
A follow-up email to investors captured Coinsquare admission of exposures that affected its customer database. The exposure made personal information vulnerable to third-party access. Notably, the email outlined the leaked database storing users’ names, contact addresses, birth dates, wallet addresses, transaction and account balances.
Surprisingly, Coinsquare reassured the users that passwords were not compromised, citing the secure cold storage shield. The in-house scrutiny did not reveal bad actors accessed the breached data. Nevertheless, Coinsquare official update cautioned users to initiate two-factor authentication (2FA), change passwords, and consider utilizing different credentials from other platforms.
Restored Trading Operations
The timely completion of system updates calmed Canadian users’ concerns about loss of deposits, as witnessed in the FTX Group collapse, in the trading platform considered the longest operating in the country. The data breach has not attracted scrutiny from IIROC or affected its dealer license.
Being an IIROC registrant positions Coinsquare to leverage first-move advantage as the sole marketplace IIROC member since October 12. As a registered investment dealer, Coinsquare yields comfort and assurance of operating at Canada’s highest regulatory compliance and oversight.
Compliance with Stringent Canada Crypto Regulation
Operating as the first IIROC-registrant trading platform mandates Coinsquare to segregate users’ funds into fully insured and licensed custodians. Further, Coinsquare utilizes the proof-of-reserve approach by disclosing its financial standing regularly while maintaining adequate capital to settle liabilities.
Further, Coinsquare must comply with the mandatory protection offered to clients’ deposits during insolvency by the Canadian Investment Protection Fund. Compliance with Canadian regulations makes Coinsquare attractive to over 500000 users and access to 40 cryptocurrencies and 820 coin-to-coin paired trading.
Unlike the US, Canada’s stringent regulatory approach makes registration with IIROC mandatory. The nonfulfillment of such requirements led to the ban of the Kucoin crypto exchange in June. The crackdown arose from the alleged nondisclosure of information requested despite its trading activities in Ontario province.