Wall Street won’t buy ‘trustless’ security promises
Chen argues that crypto exchange security is still mostly theater, and that stricter enforcement is essential.
The largest hacks happened at major global exchanges with ample capital and technology. So, a lack of resources allocated for protection wasn’t the issue — security, still treated as marketing, was.
Much of the industry keeps treating security as a performance rather than an operating discipline. Exchanges invest in what appears convincing on the surface: dashboards, reserve snapshots, protection funds, public statements. It looks reassuring, but it doesn’t prove how risk is managed day to day.
That’s why, unless security is designed to be enforced, not shown off, even the biggest platforms will stay fragile. And when stress hits, that fragility spills over to users immediately.
Performative Security is Dangerous
In fact, what’s happening is what I call “security theater.” It’s when an exchange focuses on looking safe, but not actually being safe. So the focus shifts to optics, such as headlines and polished statements, while the real governance remains weak.
I’ve seen how such a mindset takes hold. When a business is growing, it has to move fast and keep everything smooth for users. In such conditions, security controls are a friction. They slow down decisions by adding extra steps and triggering uncomfortable questions like “Who can approve this transfer?” And “what happens if the wrong person gets access?” That’s why many platforms prefer confidence on the surface over discipline inside.
And the big problem is that this false confidence doesn’t survive stress. In July 2024, India’s WazirX suffered a roughly $235 million hot valuable wallet breach and suspended withdrawals. In my view, that’s a useful reminder of how quickly “everything looks fine” can turn into users losing access to their funds.
And that’s the point. Security isn’t a page, a logo or a fund. It’s the daily rules that control how money moves, who has access and how cases are handled when something goes wrong.
