Canadian crypto exchange Coinsquare said it suffered a data breach last week on Friday, November 25, but assured of the safety of users’ assets, saying they remain “secure in cold storage and are not at risk.”
The news of the attack followed an email on Friday last week, although the attack executive the week before when the exchange informed customers via Twitter.
“Earlier this morning, we detected unusual activity on our platform, and out of caution, we decided to undergo an unscheduled maintenance period while we address this issue.”
The exchange, which advertises itself as “Canada’s trusted platform to securely buy, sell, and trade Bitcoin, Ethereum, and more,” emails customers to inform them about the “data incident” where an unauthorized party accessed a customer database containing personal information.
Details Accessed in the Breach
From the email, the breach exposed “customer names, email addresses, residential addresses, phone numbers, dates of birth, device IDs, public wallet addresses, transaction history, and account balances.” The email also added, “…no passwords were exposed,” as there was no evidence that the threat attacker had viewed any of the passwords.
Even so, the company cautioned users through a formal communication asking them to change their passwords and enable 2-Factor authentication (2FA) as a precaution for enhanced security. Not just that, Coinsquare also implored customers to remain cautious and use different credentials for different platforms.
Following the attack, Coinsquare suspended activities on the platform citing “detected vulnerability,” a move that fueled speculation of possible liquidity issues. However, according to a tweet, Coinsquare restored full service on Friday.
The fear and uncertainty follow the momentous implosion of Sam Bankman-Fried’s crypto empire earlier in November.
“Full service has been restored on the web and mobile, including fiat and crypto deposits/withdrawals. We thank you for your patience throughout the day and continued support.”
Along with the announcement of restored normalcy, the company also reiterated, “100% of client funds are safely held in cold storage and are not used for business activities.”
Coinsquare’s IIROC Registration
It is worth noting that Coinsquare is Canada’s longest-standing trading platform and the first exchange to have received registration from the Investment Industry Regulatory Organization of Canada (IIROC). It received approval in October 2022, a go-ahead signal to be an industry dealer or marketplace and member of the organization. The regulation was meant to ascertain the highest dealer compliance and oversight level under the current regulatory system.
The regulation also provided a gateway for the complete segregation of client funds that licensed and insured custodians would subsequently keep.
By being a registered member of the IIROC, the exchange is required to make a regular report of its financial standing to maintain capital for liabilities. More importantly, the Canadian Investment Protection Fund protects the cash held in client accounts in case of insolvency.
So far, Coinsquare’s registry lists over 500,000 users. The platform offers over 40 crypto tokens, including 820 coin-to-coin trading pairs. The Canadian crypto firm has facilitated almost $5.82 billion in trades from its 2014 launch.
The regulatory approach and framework in Canada differ from what is offered in the U.S., as Canada demands that all crypto exchanges operating within the country be registered or apply to the IIROC at the very least.
The U.S. has been re-evaluating the effectiveness of regulations around cryptocurrencies. The efforts became more intense following the collapse of some of the biggest exchanges and cryptocurrency ecosystems in the last year, among them being prominent brands like Celsius, Terra, Voyager, and, most recently, FTX.