Crypto at Risk: The Dangers of Outdated Encryption
▼ Summary
– No tested cryptocurrency exchanges support post-quantum encryption, leaving them vulnerable to future quantum computing attacks.
– Over 7.8 million user records are already available on the dark web, compounding existing security risks.
– Top exchanges like Coinbase and Crypto.com demonstrate strong security is achievable with fewest security findings across categories.
– Widespread security weaknesses include outdated software (74%), GDPR non-compliance (67%), and unencrypted data transmission (20% of mobile apps).
– Researchers recommend implementing enterprise-wide security programs, enforcing privacy-by-design, and preparing for post-quantum cryptographic migration.
The cryptocurrency industry faces a critical security crossroads, with new research revealing that none of the web and mobile applications tested support post-quantum encryption, while millions of user records already circulate on dark web markets. This vulnerability comes as adversaries stockpile encrypted data for future decryption using quantum computers, creating a “Harvest Now, Decrypt Later” scenario that could expose sensitive transactions. The industry’s widespread failure to adopt NIST’s new ML-KEM standard signals an urgent need for cryptographic upgrades before quantum computing becomes commercially viable.
While the overall picture appears concerning, several exchanges demonstrate that strong security is achievable even in demanding environments. Coinbase, UPbit, and Crypto.com emerged as the three most secure platforms in the study, each showing the fewest security issues across all tested categories. Their performance proves that robust application security is possible when given proper priority and resources.
The quantum readiness gap represents perhaps the most significant challenge. Every single exchange examined lacked support for ML-KEM, the post-quantum encryption standard recently published by NIST. This universal absence suggests a lengthy migration process lies ahead for the entire sector. Making matters worse, approximately one-third of exchanges continue supporting outdated protocols like TLS 1.0 and 1.1, leaving encrypted traffic vulnerable to interception through known attack methods.
Artificial intelligence introduces additional complications, with exchanges showing increased susceptibility to AI-driven threats including automated scraping, impersonation campaigns, and infrastructure mapping. Nearly half of the platforms lacked web application firewalls, leaving them exposed to bot activity and reconnaissance operations. Meanwhile, the growing use of generative AI for development acceleration creates silent risks when implemented without proper security oversight or coding standards.
Persistent security shortcomings continue to plague the industry despite repeated warnings. The research identified that 74% of web applications run outdated software or libraries, while 67% fail to meet GDPR compliance requirements. One-quarter of applications contain publicly known vulnerabilities, and 24% of mobile apps include high-risk security flaws. Perhaps most alarming, one in five mobile applications transmits data using unencrypted HTTP connections.
Privacy implementation similarly showed significant room for improvement. Forty percent of tested exchanges had no visible privacy policy available to users, while over one-third deployed tracking cookies without obtaining proper user consent. These practices create legal exposure and reputational damage, particularly in regulated markets with strict data protection requirements.
Despite these challenges, the study revealed several encouraging security trends. Close to 78% of web servers earned top marks for TLS security implementation, indicating substantial progress in encryption practices. More than half of web applications received excellent privacy grades, suggesting improved adaptation to regulatory demands. Additionally, 56.8% of main websites achieved top scores in core web application security, with most weaknesses concentrated in secondary subdomains or legacy components rather than primary platforms.
Security experts recommend cryptocurrency exchanges implement comprehensive, risk-based application security programs across their entire organizations. They emphasize the importance of building privacy and security directly into development processes rather than treating them as afterthoughts. Establishing governance frameworks for AI-assisted coding and beginning the migration to post-quantum cryptographic standards represent additional critical steps.
Industry leaders stress that security incidents and data breaches can cause substantial harm to cryptocurrency clients, making it essential for businesses to reconsider their investment priorities and strengthen cybersecurity programs. Simply increasing budgets without strategic planning often proves ineffective. A successful approach requires bringing cybersecurity, legal, and business professionals together to create holistic governance frameworks. Continuous employee education remains equally vital, as even advanced defense mechanisms provide limited value without properly trained staff to operate them.
(Source: HelpNet Security)
