JuCoin Exchange: Multi-dimensional Creation of CEX Indestructible Security Line

The construction of the exchange's security system is a complex and continuously evolving system project, requiring multi-level and in-depth defense to effectively reduce risks and ensure the safety of user assets. JuCoin Exchange has always adhered to the principle of "security first". This article will use JuCoin as an example to analyze the construction and defense practice of CEX security system.

Core principles of building a security system

The security system of JuCoin Exchange is based on the following six core principles, aiming to create a comprehensive and multi-level security protection network:

• Defense in Depth : JuCoin adopts multi-layer security measures to set up multiple barriers at various levels such as network, system, data, and applications. Even if a single security layer is broken through, there are still other levels of protection, which effectively increases the difficulty and cost of attacks.
• Principle of Least Privilege : JuCoin strictly controls the permissions of system users and processes, and only grants the minimum permissions required to complete their functions. This effectively reduces security risks caused by abuse of permissions or disclosure and reduces potential losses.
• Continuous Monitoring and Incident Response : JuCoin establishes a 7x24-hour monitoring system, monitors abnormal behaviors in the system in real time, and forms a fast response team. Once a security incident occurs, it can be quickly positioned, isolated and repaired to minimize losses.
• Security Audit and Penetration Testing : JuCoin conducts regular internal and external security audits and entrusts top international security agencies to conduct penetration testing. By simulating hacker attacks, potential vulnerabilities can be discovered and fixed in a timely manner to ensure that the system is continuously safe and reliable.
• Compliance and Regulation : JuCoin actively embraces regulation, applies for licenses worldwide, and strictly abides by relevant laws, regulations and industry standards. Compliant operations not only enhance the credibility of the exchange, but also serve as an important cornerstone for protecting user rights and interests.
• User Security Education : JuCoin continues to invest in user security education, improves user security awareness through multiple channels, educates users on how to use strong passwords, enable two-factor authentication, etc., and jointly build a safer trading environment.

****Key technologies and measures for CEX security defense——JuCoin

Exchange Practice****

JuCoin Exchange has implemented the above security principles into specific technologies and measures, and has built a multi-dimensional and three-dimensional security defense system:

• Advanced Threat Detection Systems : JuCoin deploys advanced threat detection systems powered by AI to achieve all-round security protection:
• Real-time monitoring : Monitor network traffic, system logs, user behavior, etc. in real time around the clock, and detect abnormal activities in a timely manner.
• Behavior analysis : Using behavioral analysis technology based on machine learning and artificial intelligence, we identify suspicious behaviors that deviate from normal patterns, such as abnormal login, large-scale transfers, suspicious transactions, etc.
• Threat Intelligence : Access to the world's leading threat intelligence platforms, such as AlienVault OTX, obtain the latest threat information, update defense policies in a timely manner, and deal with known and unknown threats.
• Intrusion Detection and Defense System (IDS/IPS): Deploy enterprise-level IDS/IPS systems such as Fortinet to detect and block malicious cyber attacks such as DDoS attacks, SQL injection, cross-site scripting attacks, etc.

Smart Contract Security Audit : JuCoin has undergone strict security audits on all smart contracts used to ensure the security of the code:

• Code Audit : Adhere to strict code audits conducted by top international third-party security audit companies such as CertiK to ensure the security, reliability and compliance of contract codes.
• Vulnerability Scan : Use automated vulnerability scanning tools such as Trail of Bits Slither to quickly detect known security vulnerabilities in smart contracts.
• Formal verification : For key smart contracts related to core business, formal verification technologies, such as Isabelle/HOL, are introduced to mathematically prove the correctness and security of contract codes to minimize risks.
• Continuous monitoring : After the smart contract is deployed, continuous monitoring is carried out and cooperation with security agencies such as PeckShield to promptly discover and repair new vulnerabilities.

Multi- signature Wallet Operation and Management : JuCoin adopts multi-signature wallet technology and combines strict management systems to ensure asset security:

• Multi-signature principle : Multi-signature wallet requires multiple private keys to be jointly authorized to conduct transactions. Even if some private keys are leaked, the attacker cannot transfer assets separately, greatly improving security.
• Key Management : The private keys of the multi-signed wallet are stored in physically isolated HSM hardware security modules, stored by members of the core security team distributed in different locations around the world, and a complete key management process has been established to comply with the ISO27001 standard.
• Permission control : Reasonably set the signature threshold and permission allocation of multi-signature wallets. Key transactions require 3/5 or even higher proportions to be executed to ensure the security and efficiency of transactions.
• Operation process : Establish an extremely strict multi-signature wallet operation process, such as transaction initiation, multi-level approval, multi-party signature, broadcasting and other links. All operations need to be recorded in detail and subject to security audits.

Cold and Hot Wallet Management : JuCoin has implemented an advanced cold and hot wallet separation storage solution to ensure the security of user assets to the greatest extent:

• Cold wallet storage : Most of the user assets (more than 99%) are stored in physically isolated offline cold wallets. The cold wallet is physically isolated from the network and monitored by a dedicated person 24 hours a day, greatly reducing the risk of being hacked.
• Use of hot wallets : Only a very small amount of funds (less than 1%, far below the industry average) are stored in hot wallets, only used to support daily operations and users to quickly withdraw cash. Hot wallets are deployed under a multi-layer security protection system, such as multi-signature, strict access control, real-time security monitoring, etc.
• Fund transfer process : Establish a bank-level hot and cold wallet fund transfer process. Transferring funds from cold wallets to hot wallets requires strict multiple authorizations and security audits to ensure that the fund transfer process is safe and controllable.
• Regular audits : The funds storage and transfer of hot and cold wallets are regularly audited by an independent third-party auditing agency to ensure the security of funds and clear accounts.

Multi-signature Technology Implementation : JuCoin has always been at the forefront of the industry in the implementation of multi-signature technology:

• Technology selection : According to the specific needs and security levels of different currencies and business scenarios, the most suitable multi-signature technology solution is flexibly selected. Currently, multiple signatures include HSM hardware wallet-based multi-signatures based on MPC (multi-party computing), and multiple signatures based on MPC (multi-party computing). An advanced technical solution.
• Parameter configuration : According to the risk assessment results, rationally configure multi-signature parameters, such as dynamically adjusting the signature threshold, number of keys, key types, etc., to achieve the best balance between security and ease of use.
• Security implementation : When implementing multi-signature technology, special attention is paid to the secure generation of keys, high-strength encrypted storage, off-site backup and disaster recovery, as well as the comprehensive security design of transaction processes.
• Compatibility : When selecting technology, fully consider the seamless compatibility of multi-signature technology with the exchange's existing systems and business processes, ensuring that while improving security, no new security risks are introduced and user experience is optimized.

Warning of major typical events

Looking back at the development of cryptocurrency exchanges, there have been many major security incidents, which has sounded the alarm for the industry:

Mt.Gox exchange theft incident (2014): Mt.Gox, the largest Bitcoin exchange in the early days, eventually went bankrupt due to multiple theft incidents, warning CEX that it must attach great importance to private key security and timely repair of system vulnerabilities.

Coincheck Exchange Theft Incident (2018): The Japanese exchange Coincheck stolen NEM coins, which suffered huge losses, once again emphasized the importance of separation of hot and cold wallets and multi-signature technology.

Binance Exchange Theft Incident (2019): 7,000 Bitcoins were stolen on Binance Exchange, indicating that API security management is also an indispensable and important part of CEX security.

KuCoin Exchange Theft Incident (2020): KuCoin Exchange has stolen a large number of crypto assets, once again reminding CEX that it needs to continue to strengthen internal security management and supply chain security.

Since its establishment, JuCoin has never had any major security incidents. Thanks to its always adherence to the principle of "safety first", and has continued to invest huge amounts of funds and technical forces to build and continuously upgrade the security system of the exchange.

Bybit Analysis and reflection on theft of crypto assets

Recently, the Bybit Exchange suffered a $1.4 billion crypto asset theft, which once again triggered the industry's in-depth thinking about CEX security. Analysts point out that this incident is likely to be an APT attack initiated by Lazarus Group (North Korea hacker group), targeting Bybit’s Ethereum multi-signal cold storage wallet, which is known as the “largest cryptocurrency theft case in history”. The preliminary analysis report also Pointing to Operational Security failed.

Possible crime process (speculation):

1. Early penetration and malicious contract deployment: Attackers may have begun APT penetration of Bybit exchange systems as early as February 19, 2025 or even earlier, lurking and deploying malicious contracts for a long time.

2. Positioning multi-signed wallets and replacement contracts: The attacker accurately locates multi-signed cold wallets that store a large number of ETH assets on the Bybit exchange, and on February 21, the Safe implementation contract for the Bybit multi-signed cold wallet was pre-deployed malicious. Contract, this is the most critical step in the attack.

3. Key leakage or cracking and multi-signature authorization bypass: The attacker may have previously stolen or cracked a sufficient number of multi-signature private keys, and after the malicious contract replacement is completed, use the backdoor function to bypass the normal multi-signature authorization mechanism. Successfully transferred US$1.4 billion worth of ETH and stETH assets in Bybit Ethereum cold wallet.

4. Coin withdrawal wave and industry mutual assistance: The stolen incident of Bybit exchanges has caused market shock and user panic. Many exchanges such as Bitget, MEXC, KuCoin, etc. have provided industry mutual assistance, alleviating Bybit's liquidity pressure and market panic.

CEX Security Weaknesses:

• Operational security risks are the core weakness : Bybit incidents show that even with high security technologies such as multi-signal and cold wallets, operational security management vulnerabilities can still lead to catastrophic security incidents.
• Advanced Persistent Threat (APT) defense capabilities need to be improved urgently: CEX needs to deploy more advanced and intelligent threat detection and defense systems, and establish a professional security team and APT offensive and defense drill mechanism to effectively improve the defense capabilities of unknown advanced threats.
• The complexity and risks of key management of multiple wallets coexist : Multi-sign wallet technology improves security, but also brings the complexity of key management. Negligence or vulnerability in any link may introduce new security risks, so you cannot be overly superstitious. Technology itself should pay more attention to the implementation and management details of the technology.
• Internal personnel risks have always been one of the biggest challenges of CEX's security: CEX's security highly depends on the professionalism, professional ethics and safety awareness of internal personnel. It is necessary to continuously strengthen internal security management, establish a complete internal risk control system, and minimize internal security. Personnel risk.

****Establish a safer CEX system: JuCoin Exchange 's multi-dimensional

security improvement solution****

In order to build a more indestructible CEX system, JuCoin continues to improve security in the following dimensions based on existing security technologies and measures:

Continuously strengthen advanced threat detection systems :

• Deeply integrate AI and machine learning: Increase investment in the fields of AI and machine learning, train more advanced threat detection models, improve threat intelligence analysis capabilities, and achieve more accurate identification and prediction of unknown threats.
• Build a more comprehensive security information and event management (SIEM) system: Further upgrade the SIEM system, integrate more comprehensive security data, optimize log analysis and association analysis algorithms, realize centralized monitoring, intelligent analysis and rapid response to security events across the platform, and The average response time (MTTR) of security events is reduced to minutes.
• Comprehensive deployment of UEBA (User and Entity Behavior Analysis) system: The UEBA system has been fully deployed to monitor user and entity behavior patterns in real time, and automatically identify abnormal behaviors based on AI algorithms to achieve active discovery and risk of internal threats, account theft, API abuse and other risks. Accurate early warning.
• Normalized and practical red team drill mechanism : Red team drills are used as a normalized security operation mechanism. The red team composed of top global security experts simulates real hacker attack scenarios and conducts a comprehensive and high-intensity approach to the exchange security defense system. Penetration testing and practical inspections continue to discover and repair potential, deeper security vulnerabilities.

Continuously strengthen smart contract security audit :

• Implement stricter audit standards : Implement smart contract audit standards that are far higher than the industry average, and introduce fuzzing and symbolic execution based on existing code audits, vulnerability scanning, formal verification, etc. More advanced audit technologies can realize 100% code coverage test of smart contract code, ensuring zero vulnerabilities and zero risks in smart contract code.
• Implement the "multi-party + cross-audit" audit mechanism: Maintain in-depth cooperation with top international security audit companies such as CertiK, PeckShield, and TrailofBits. In the important smart contract auditing process, innovatively introduce the "multi-party audit + cross-audit" mechanism to maximize the auditing of audits. Objectivity, comprehensiveness and professionalism.
• Establish a "Vulnerability Bounty Plan": Continue to operate and upgrade the "Vulnerability Bounty Plan", significantly increase the amount of vulnerability bounty, establish closer cooperative relationships with the global white hat hacker community, and build a "global white hat hacker joint security" Innovate the security defense system.
• Establish a mechanism for "Quick response and hot repair of smart contract security vulnerabilities": Establish a 7x24-hour fast response and hot repair of smart contract security vulnerabilities to ensure that vulnerability analysis, repair plan formulation, code hot repair, security testing, and online in a very short time The entire process of deployment and other processes will shorten the average repair time of smart contract security vulnerabilities to the hourly level, minimizing the risk of vulnerabilities being exploited.

Continuously optimize the operation principle and management of multi-signment wallets :

• Comprehensively upgraded HSM hardware security module: Comprehensively upgraded HSM hardware security module, adopting a new generation of HSM hardware with higher security levels and higher performance, and introducing multiple HSM hardware redundant backup mechanisms to improve the security of multiple wallet private keys to Extreme.
• Innovatively introduce "key sharding + geographic location dispersion" technology: Based on the key sharding technology (Secret Sharing), innovatively introduce the concept of "geographic location dispersion" to store key fragments of multiple wallets in a scattered manner In many physical locations with extremely high security factors around the world, the risk of private key leakage is eliminated from the physical level.
• Building a "biometric + hardware token + geolocation triple-factor authentication and authorization mechanism: In the multi-sign transaction process, innovatively build a "biometric + hardware token + geolocation triple-factor authentication and authorization mechanism" to authenticate the identity and authorized security strength has been increased to an unprecedented level.
• Create a "full process traceable, all-round visualization, fully automatic intelligent security audit log and monitoring platform: We will make a lot of money to create a new generation of security audit log and monitoring platform, realizing full-process recording and full-dimensional visual display of all operation logs of multi-sign wallets. Fully automatic intelligent analysis and real-time risk warning to achieve comprehensive security audit and monitoring of "pre-warning, during-process blocking, and after-process traceability".

Continuously improve the management plan for hot and cold wallets :

• Introducing the "AI-driven dynamic hot and cold wallet intelligent balance system: Innovatively introduce the "AI-driven dynamic hot and cold wallet intelligent balance system", which is based on AI algorithm to predict the exchange's transaction volume, user withdrawal demand, market volatility risks and other key points based on AI algorithms. Indicators, dynamically and intelligently adjust the proportion of funds of hot and cold wallets to minimize the proportion of funds storage of hot wallets.

• Explore "full automation and zero manual intervention in hot and cold wallet funds transfer technology: On the premise of ensuring absolute security, actively explore "full automation and zero manual intervention in hot and cold wallet funds transfer technology", such as using a trusted computing environment (TEE), Frontier technologies such as multi-party computing (MPC) minimize the risks that may be introduced by manual operations.

• Build a "multi-dimensional, three-dimensional, intelligent linkage" hot wallet security protection system: Build a "multi-dimensional, three-dimensional, intelligent linkage" hot wallet security protection system, for example, on the hot wallet server side, deploy dozens of security protection technologies and Security equipment, and intelligently link all security equipment and systems to achieve the highest security protection level of "single-point threat triggering, coordinated defense of the entire platform".

• Build a multi-active disaster recovery center in three places in "same city + off-site + overseas": build a multi-active data center and disaster recovery system in three places in "same city + off-site + overseas" to achieve real-time synchronous backup of all key data Switching and seconds can ensure that the exchange business can operate continuously, stably and safely in any extreme situation.

****Protecting the security of crypto-investors: The ultimate mission of

JuCoin Exchange****

Establishing the world's safest and most trusted cryptocurrency trading platform and protecting the property of crypto investors to the greatest extent is JuCoin's eternal original aspiration and mission. JuCoin will continue to invest massive resources, constantly innovate security technologies, iterate security systems, optimize security processes, strengthen security management, and unswervingly build the most indestructible security line for global crypto investors, so that every user who chooses JuCoin will Be able to truly conduct crypto asset transactions with confidence and security, and embrace the bright future of cryptocurrencies together.

Summarize

The security construction of CEX is a systematic project with no end and continuous evolution. It requires endless learning and innovation, and continuous reference and integration of state-of-the-art security technologies and best security practices. JuCoin Exchange will continue to adhere to the principle of "security first", continuously improve security protection capabilities, and provide users with safe, reliable and trustworthy crypto asset trading services.

Website: https://www.jucoin.com
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