Cryptocurrencies have presented several vulnerabilities during their trajectory, which have been the cause of displeasure on the part of users. If you are interested in bitcoin open a free 1K Daily Profit account
Investing and managing digital currencies makes exchange platforms essential, which are applications that protect these digital assets and allow them to be operated.
These platforms have sometimes presented problems with the management of cryptocurrencies; according to a study carried out by the University of Leiden, it should be considered that if one of these platforms that manage digital currencies goes bankrupt, users or investors would not have control of their digital capital to the point of losing it entirely.
An example is a collapse suffered by the Mt.Gox platform of Japanese origin and BitGrail in Italy, which can happen again anytime.
Platforms like Coinbase do not issue blockchain addresses
One of the disadvantages for investors who store their digital currencies in the Exchange is that they do not generate the lessons of the blockchain system, which could create problems in the event of bankruptcy for the recovery of cryptocurrencies by investors.
When investing in cryptocurrencies, you must be aware of the risks you run so that you are not surprised if a situation similar to the bankruptcies of the platforms above occurs.
Aspect that Coinbase possesses absolute control of the secret keys for access to the bitcoins contained in it, having free access to users’ wallets and funds, which increases the risks of suffering cyber attacks and even mismanagement of the crypto actives.
Due to its total control, it can be interpreted that the platform is the owner thereof or that ownership has been transferred to it, interfering in the proper allocation of digital currencies to private users.
The process to follow in case of platform failure.
In this type of inconvenience, the most common thing is to sue the bankrupt platform responsible for the debt in question to pressure and try to get the company to fulfill its obligations acquired by commitment.
Sometimes, as was seen in the case of Mt.Gox, where the bitcoins that were under their possession were used to pay off debts incurred and not to respond to users, this was due to the lack of regulation by the government and entities competent in the crypto field.
The Coinbase Exchange establishes in its regulations that the title of property of the crypto assets entered into it will be at all times of the investor and may not be given to any representative or group belonging to the exchange platform.
Although this strategy is beneficial, more is needed to satisfy users’ demand for security and support. Furthermore, the analysis issued by the Faculty of Law of the University of Leiden shows the possible legal risks faced by warehouses cryptocurrencies.
When an exchange platform becomes insolvent, that is, it goes bankrupt, the recovery of the crypto assets by the clients will depend on the condition, and the terms in which said management and safekeeping agreement has been established.
Many Exchange failures have been seen.
The situations of suspension of payments by the exchange platforms are not surprising events and can occur several times depending on the administration and management with which the development of the same is handled.
Currently, many platforms have stopped operating entirely due to bankruptcies in their administration, such as QuadrigaCX from Canada, Cryptopia from New Zealand, Cointed GmbH from Austria, and many more worldwide, suggests that the property and rights of investors are uncertain.
Investments in cryptocurrencies are a new digital economy strategy, which presents some risks that the investor must be aware of and be willing to run in case of deciding to invest in this digital field.
Although only some things result in losses, there are cases where financial gains and trading benefits are exciting when using cryptocurrencies.
Despite the negative speculative currents around cryptocurrencies, many people, organizations, and institutions are committed to a new digital, decentralized economy that allows the inclusion and general financial growth of the entire world without distinction.