Following the FTX meltdown, users are worried about the safety of the crypto exchanges they use. Millions and millions of dollars of user funds have been lost due to exchange hacks, bankruptcies and general failures. The importance of choosing a secure exchange. Many users have begun to wonder if the Gemini exchange is safe and a trustworthy place to buy and sell cryptocurrencies.
What is Gemini?
Gemini is a popular U.S.-based centralized exchange. On Gemini, users can purchase the top cryptocurrencies on the website or smartphone application. Gemini is more than just an exchange; the company also offers a staking service and a credit card for users.
Cameron and Tyler Winklevoss, the founders of the exchange, are big names in the crypto sector who are famous for their involvement with Mark Zuckerberg in college and a Facebook lawsuit The twin's second act has been in crypto. Both Cameron and Tyler are avid representatives of the Bitcoin movement. They launched Gemini in 2014.
Why Security is Vital for Crypto Exchanges
Outflows from all centralized exchanges, including Gemini, have increased following the FTX insolvency. Before its failure, FTX was presumed to be one of the most trustworthy exchanges in the world. With naming rights over an NBA arena, celebrity endorsements and a CEO who had strong ties in Washington, the exchanges attracted millions of users who thought their funds were safe.
When FTX filed for bankruptcy, trust in other centralized exchanges was damaged. The loss of billions in user funds that resulted from the FTX scandal grants exchange participants the right to be skeptical. Crypto exchanges function as unregulated or barely regulated banks — representing a return to the old system of fiat money that crypto was designed to get away from. Centralization goes against the ethos of crypto.
What Makes Gemini Safe?
Centralization means that you trust a third party with your money — but trust can be betrayed. However, a few features of Gemini increase trust and provide more safety than other exchanges. These are highlighted below.
Compliance
Gemini is subject to the security requirements of U.S. and global regulators, which include the following, among others:
- New York Department of Financial Services (NYSDFS)
- National Futures Association (NFA)
- Financial Industry Regulatory Authority (FINRA)
- Monetary Authority of Singapore (MAS)
- U.K. Financial Conduct Authority (FCA)
- Money Service Business (MSB) regulations under the Financial Crimes Enforcement Network (FinCEN)
- Bank Secrecy Act of 1970 (BSA)
- USA PATRIOT Act of 2001 (Patriot Act)
- AML/CTF provisions as mandated by U.S. federal law and any other rules and regulations regarding AML/CTF
- State money transmission laws
- Laws, regulations, and rules of relevant tax authorities
Gemini also hires third parties to test its platform for security risks. It claims to do this at least on an annual basis.
Asset Security
Gemini uses multi-signature wallets to secure assets and make it more difficult for hackers to infiltrate the system, as there is no singular point of failure.
Digital Asset Insurance
Gemini takes its responsibilities as a centralized exchange seriously. It maintains commercial crime and specie insurance for the digital assets it has custody of in its online hot wallet and Gemini custody. Its insurance policy is made available through a combination of third-party insurance underwriters and insures against the theft of digital assets from its wallet that results from a direct security breach or hack of Gemini's systems, a fraudulent transfer initiated by Gemini or theft by a Gemini employee.” Additionally, Gemini’s cold storage coverage attracts leading insurance providers.
The majority of assets are held in Gemini's offline cold storage system. and only a small portion is held in the online hot wallet. Assets in cold storage are still instantly accessible to investors. The Gemini team works to upgrade its exchange to offer new cryptocurrency offerings and additional security protections — for example, Gemini was early to introduce interest-bearing accounts for digital assets.
Certifications
Gemini completed SOC 1 and SOC 2 Type 2 exams. The company also holds ISO 27001 certification. These certifications are not common in the cryptocurrency sector, which gives Gemini a large leg up.
Can Crypto Exchanges Be Trusted Anymore?
When examining the company, no obvious reasons to not trust Gemini emerge. It appears to be operating in a manner that is in line with the law and using the best practices for safety, all in a transparent manner. Gemini is not necessarily deserving of the negative effects that the failure of a rival company is inflicting; however, users are rightfully wary of centralized crypto organizations.
Common wisdom among crypto experts is that users are better off holding their funds themselves. By using a noncustodial wallet, crypto users do not have to rely on corporations to be responsible. However, if you choose to use an exchange, heavily regulated and compliant exchanges like Gemini are a far better choice.
How Can Investors Keep Their Crypto Safe?
The best way to keep your crypto safe is by holding your own keys. Users should put their funds in cold storage in a non-custodial wallet. One example is the Ledger Nano S Plus, which has been a reliable hardware wallet for crypto users. A hardware wallet keeps your funds directly in your control and offline, with funds out of harm's way from phishing scams and other hacker activity.
Best Hardware Crypto Wallet: Ledger Nano S Plus
Ledger is a company that creates hardware wallets. Its latest product, the Ledger Nano S Plus, has gotten great reviews and is a popular non-custodial/cold storage wallet. It is everything you need to keep your cryptos safe. It also supports all of the top cryptos including Bitcoin, Ethereum, Dogecoin, Ripple and all ERC-20 tokens.
Best Software Wallet: ZenGo
Software wallets connect to the internet; they are also needed for users looking to go completely bankless. These wallets can be added as a Chrome extension, and they connect users to popular decentralized applications such as Uniswap, where cryptocurrencies can be traded in a decentralized manner. One popular software wallet is ZenGo. Funds should be transferred from a software wallet to a hardware wallet when wanting a top level of security.
So, Is Gemini Safe?
Gemini is safer than most crypto exchanges. It follows active U.S. regulations, gets audited by third parties and appears to practice good security for crypto assets. However, to be sure your funds are safe, it is best to use a hardware wallet.
Frequently Asked Questions
Is Gemini Safe?
Gemini is clearly one of the safest crypto exchanges with more security features than most competitors. However, it is still smart to use a personal wallet instead of holding cryptos on exchanges.
Is Gemini available in the U.S.?
Yes. Gemini operates in the U.S. and is available in more than 60 countries around the world.
What happens if I lose access to my hardware wallet?
The biggest risk of a hardware wallet is you become your own bank. This is why you need to store your secret seed phrase separately. You can use it with a new wallet to recover your funds. If you lose both the wallet and the seed phrase, you will likely be unable to access your funds.
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