The biggest cryptocurrency trading firms has come together to discuss ways to prevent the rising number of hacks and scams in the industry, and proposed the creation of a blacklist that could keep thieves at bay.
Ripple, market maker Cumberland, Michael Novogratz's Galaxy Digital Holdings and over 30 other firms met at a recent round-table event in Chicago for the initiative, Bloomberg reported.
During the event, the creation of a list of entities involved, directly or indirectly, in illicit activities was considered, as well as giving companies with a good reputation some form of accreditation.
A community-wide effort to improve compliance standards would prevent liabilities that might stem from trading with bad actors or dealers that trade with bad actors"
Other options considered included standards to verify the identities of customers, and sharing information on those who default on derivatives trades. The event, organized by Crypto OTC Roundtable Asia (CORA) didn't see the firms reach a final decision. CORA is set to meet again in the near future.
"A community-wide effort to improve compliance standards would prevent liabilities that might stem from trading with bad actors or dealers that trade with bad actors," Darius Sit, managing partner at Singapore-based crypto trading firm QCP Capital, told Bloomberg. "A self-governance initiative like this is also something that regulators are keen to see."
While the decade-old crypto market has attracted top technologists and developers, as well as a flock of former Wall Street traders, it has also been a magnet for scammers and criminals. As if to make the point, at the same time as the crypto traders were meeting in Chicago, Binance, one of the world's largest cryptocurrency exchanges, discovered hackers had stolen 7,000 bitcoins worth about $40m, which briefly sent the digital-token market down about 3%, before it recovered.
Blockchain analytics firm CipherTrace recently estimated that losses arising from cryptocurrency hacks and fraud may have already reached about $1.2bn in the first quarter of this year alone (a number that includes Bitfinex's allegedly missing $850m). The figure is almost 71% of the $1.7bn loss seen over the whole of 2018, the firm said.
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