5 Ways to Protect Your Crypto Exchange From Automated Bot Attacks
An automated bot attack is a type of large-scale digital operation in which web requests from various devices (bots forming a botnet) are used to perform an attack. These attacks can target a business's website, backend, or users. These bots form part of a botnet created by infecting networks of devices with malware, putting them under control by a bot herder. These compromised networks are then used to launch attacks with predefined actions that harvest user credentials, crash websites or networks, and disrupt the online business in some way for financial gain.
Crypto exchanges are especially vulnerable to these attacks because they use new technologies that often have security holes or are visited by many users that want to remain anonymous, allowing fraudsters using bots to blend in with the crowd.
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How Do Automated Bot Attacks Work?
Once the botnet gains control over a group of connected devices. Fraudsters then use these botnets to perform the following types of automated bot attacks:
1. Phishing Attacks
Phishing attacks exploit social engineering methodologies to persuade people to share their personal information or login credentials. Usually, fraudsters pretend to be a trusted and legitimate source (such as the crypto exchange) and fool people into performing a desired action like following a malicious link or replying to the email with the desired information.
2. Denial-of-Service Attacks
A distributed denial-of-service (DDoS) attack involves using bots to crash a server by overloading it with web traffic. This method is used by fraudsters to disrupt website functioning and to launch additional botnet attacks whilst servers are compromised. Crypto exchanges often see high levels of traffic and will only notice a DDoS attack when it's too late.
3. Brute Force Attacks
Brute force attacks are based on trial-and-error principles. Cybercriminals will guess users' login information or reuse previously compromised user credentials and attempt username and password combinations in quick succession to "force" entry into private accounts. Modern brute force attacks are intelligently executed to blend into the crowd of normal user login attempts.
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How to Protect Your Crypto Exchange from Bot Attacks
Every crypto exchange should be protecting its users from the threat posed by online fraudsters. Below are the some common methods crypto exchanges use to protect themselves and their users from bot attacks, ranked worst to best (skip to point 5 for the best solution).
1. Block Old User-Agents and Browsers
By blocking older browser versions from your crypto exchange, you'll make it harder for less-sophisticated bots to target your site, but also harder for users with older devices and software as well (which chases away revenue). Some exchanges do this because many bot scripts make use of these outdated credentials and browser versions. A good fraud prevention solution will monitor old browser user agents and versions as part of its real-time functionalities.
2. Block Data Center IP Addresses
Less advanced bot attacks tend to make use of proxy servers that have already been used in previous attacks. Blocking data center IP addresses with a known history of fraudulent activity is an easy way to reduce cybercrime on your crypto exchange, but you may also be blocking legitimate users with those IP addresses too. Again, it’s better to use a fraud prevention platform that doesn’t blanket block and drive away potential revenue.
3. Use Multi-Factor Authentication
Introducing multi-factor authentication is a great way to secure your crypto exchange against future attacks. Users logging into your exchange will require a username, password, and an additional one-time password (OTP) that is sent in real-time to the user's smartphone to provide an extra layer of protection during the login process. This does add some friction to the user experience.
4. Secure APIs & Trading Bots
Securing APIs from hackers stops them from accessing trades directly. Creating a secret API key adds an added layer of protection to prevent fraudsters from gaining access to your exchange. For even greater protection, delete API keys once you have stopped using a particular trading bot.
As well as securing APIs, it's also important to secure your trading bots. Choose a reliable and secure trading bot with robust security features designed to protect your data. Signs of a good trading bot include private user keys, encryption, and segregated data storage.
5. Use AI Models to Monitor Traffic
Using AI models to monitor user behavior across the site intelligently implements the best of the above methods while eliminating user friction. Every crypto exchange should be monitored for traffic spikes, suspicious traffic sources, unusual bounce rates, and overall site performance. Spikes in traffic or bounce rates that occur over a short period of time for no apparent reason indicate a potential bot attack. Looking out for changes to site performance or unusual shutdowns can indicate an influx of bot-related traffic. Once suspicious activity is detected, then it can be stopped or challenged with the above methods, allowing legitimate users to continue using the exchange without any friction.
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Secure Your Crypto Exchange
The best way to secure your crypto exchange against automated bot attacks is not to use indiscriminate blocking tactics that will filter out legitimate customers, but to use a fraud prevention solution that intelligently monitors all site traffic and differentiates between bot activity and legitimate user activity. nSure.ai is a holistic fraud prevention solution that uses machine learning models to provide crypto exchanges with peace of mind. Humans can't react in time to notice or stop carefully crafted automated bot attacks, but nSure.ai lifts the load off of the anti-fraud team by catching even the most advanced fraud activity.