September 2024 has been a sobering month for cryptocurrency users who keep their assets on centralized exchanges. With BingX losing $44 million, Indodax suffering a $21 million breach, and Penpie drained of $27 million, the industry has seen over $120 million stolen in just one month across more than 20 separate hacking incidents. If you hold cryptocurrency on any exchange, understanding how to protect yourself in the aftermath of a breach is essential knowledge. This guide walks you through exactly what to do, step by step.
The Basics
When an exchange announces a security breach, the situation unfolds in predictable stages. First, the exchange detects the attack and suspends withdrawals to prevent further losses. Then, the exchange engages security firms to investigate, and the investigation and recovery phase begins. Finally, services gradually resume as the exchange confirms its systems are secure. Each of these stages requires different actions from users.
The most important thing to understand is that not all breaches are equal in severity. A hot wallet breach like the one BingX experienced affects only the exchange’s operational funds, not necessarily user account balances. However, the uncertainty and communication gaps during the immediate aftermath make it critical to take proactive steps to protect your assets, regardless of the official severity assessment.
With Bitcoin trading near $63,395 and Ethereum at $2,616, even small holdings represent meaningful financial value. The steps outlined below will help you minimize risk whether you are directly affected by a specific breach or simply want to be prepared for the next one.
Why It Matters
The pattern of exchange hacks in 2024 has been alarming. India’s WazirX lost over $230 million, Japan’s DMM Bitcoin suffered a $300 million breach, and September alone saw $120 million stolen across multiple platforms. No exchange, regardless of size or reputation, is immune to these attacks.
While many exchanges promise to compensate users for losses, the recovery process can take weeks or months. During that time, you may be unable to access your funds, and in the worst-case scenario, an exchange could become insolvent if losses exceed its reserves. Having a plan in place before a breach occurs is far more effective than trying to figure out what to do in the panic of the moment.
Beyond the financial risk, exchange breaches can also compromise personal information. Email addresses, KYC documents, and transaction histories may be exposed during sophisticated attacks, creating additional risks including phishing attacks and identity theft.
Getting Started Guide
Step 1: Verify the breach through official channels. Do not rely on social media rumors or third-party reports. Check the exchange’s official website, verified social media accounts, and support pages for confirmed statements. BingX, for example, communicated through its support portal and the X account of its Chief Product Officer, Vivien Lin.
Step 2: Do not panic, but do not wait. If the exchange has not yet suspended withdrawals, immediately initiate a transfer of your funds to a wallet you control. Time is of the essence, as exchanges typically freeze withdrawals within hours of detecting a breach. Even if only the hot wallet is affected, a broader security review may result in extended service interruptions.
Step 3: Set up a hardware wallet if you do not already have one. Hardware wallets from manufacturers like Ledger or Trezor store your private keys on a secure physical device that is disconnected from the internet. This makes them immune to exchange-level hacks, phishing attacks, and most malware. Setting up a hardware wallet takes approximately 15 to 20 minutes and is the single most effective step you can take to protect your cryptocurrency.
Step 4: Enable all available security features on your exchange account. Activate two-factor authentication using an authenticator app, not SMS. Enable anti-phishing codes if the exchange offers them. Set up withdrawal address whitelisting, which restricts withdrawals to pre-approved addresses and typically includes a 24-hour delay for adding new addresses. These measures protect against account-level attacks even if the exchange itself is compromised.
Step 5: Monitor official communications for updates on service restoration. Once the exchange completes its investigation and confirms system security, it will announce a timeline for restoring withdrawal services. Be prepared for high traffic and potential delays when services resume, as many users will be attempting to withdraw simultaneously.
Common Pitfalls
The most dangerous mistake users make during exchange breaches is falling for phishing scams. Attackers routinely create fake exchange websites, customer support accounts, and email notifications that mimic official communications. These scams attempt to steal login credentials or trick users into sending funds to attacker-controlled addresses. Always verify that URLs are correct and that social media accounts have verified badges before clicking any links or entering any credentials.
Another common error is attempting to sell assets at a discount through unofficial channels during withdrawal freezes. Fear-driven users sometimes transfer account access or sell claims to third parties at significant discounts, only to discover that the exchange has fully restored services and compensated users for any losses. Patience and verification through official channels almost always produces better outcomes than panic-driven transactions.
A third pitfall is ignoring the breach because your specific exchange was not mentioned in the initial reports. The clustering of attacks on Asian exchanges in September 2024 demonstrates that attackers often target multiple platforms simultaneously. If any exchange in your portfolio has been compromised, assume that others may be targeted next and take preventive action accordingly.
Next Steps
Once the immediate crisis has passed and you have secured your assets, take time to develop a long-term custody strategy. The fundamental principle is simple: keep only the funds you need for active trading on any exchange. Everything else should be in your personal custody, ideally in a hardware wallet.
For users who interact with DeFi protocols, consider using a dedicated “hot” wallet with limited funds for on-chain activities, separate from your primary storage wallet. This limits your exposure if any single protocol or wallet is compromised.
Finally, stay informed about security developments in the crypto space. Following blockchain security firms like PeckShield, SlowMist, and Chainalysis on social media provides early warning of emerging threats. The cryptocurrency industry loses hundreds of millions of dollars to hacks every year, and the exchanges and protocols that handle your money are not exceptions to this trend. Preparation and proactive security practices are your best defense.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always conduct your own research and consider consulting a qualified professional before making financial decisions.
step 1 should always be move to self custody. step 2 is verify the address. everything else is damage control
self custody is step 1 until you realize most people cant secure a seed phrase to save their life. the hardware wallet recommendation in this guide is the practical middle ground
hardware wallet is the answer but setup friction is real. most people just wont do it until they lose funds once
moving to self custody is step 1 yes but what about the people who had funds locked during the investigation? the guide skips the recovery process
BingX, Indodax, Penpie in the same month. if youre still keeping everything on one exchange youre asking for it
three exchanges in one month and somehow people still argue that CEX is safer than defi
$120M stolen across 20 incidents in one month and people still use the same password on every exchange. spread across wallets AND use a password manager