Crypto exchanges and other intermediaries such as cross-chain bridges are where the latest series of crypto hacks on internet-based “hot” wallets have been taking place. Exchanges need to put in additional security measures, said Alex Zinder, global head of hardware wallet maker Ledger Enterprises.
Zinder said on CoinDesk TV’s “First Mover” show that the crypto ecosystem’s rapid growth has increased the threat of hacks and exploits, creating safety issues “that are very difficult to manage.”
“The way we look at this problem set is security at the edges,” said Zinder. “The challenge is, as you build additional complexity into the ecosystem you have more intermediaries and different players.”
Zinder’s spoke days after the latest hack to sweep the crypto ecosystem. On Tuesday more than 8,000 Solana blockchain hot wallets were compromised, draining at least $5 million worth of Solana-based tokens from unsuspecting users.
The exploit has “renewed a focus on security,” which could be a “symptom of crypto’s own success,” he said. However, Zinder said, the Solana blockchain is not the problem.
“It’s the intermediaries, it’s the wallet providers,” he said.
Unlike the hot wallets that are always connected to the internet, Zinder’s company, Ledger, provides “cold,” or external wallets, that are not connected to the internet but stores crypto key information on hardware, such as a USB-like external device.
The crypto industry’s growth could be based on partnerships between exchanges and hardware wallet providers, he said.
“Security is really the precursor to mass adoption and scalability,” he said.
The France-based wallet maker, now valued at $1.5 billion, raised $380 million in a Series C funding round in June 2021.
While Zinder did not comment on whether his company has secured the $100 million in funding it seeks, he said Ledger has sold more than 5 million hardware wallets that hold crypto, or about 15% of the world’s crypto asset holdings.
In addition, Zinder is bullish on the use of non-fungible tokens (NFT). Here, too, he sees the need for security, especially for major corporations using NFTs to push their brands.
“If you do that incorrectly, if you compromise on security or you compromise on governance, you're putting that audience, community and your brand at risk fundamentally,” he said.
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