As Bitcoin reaches unprecedented levels following yesterthe US election results, thousands of first-time investors are rushing to enter the cryptocurrency market. But new research from CertiK – the blockchain security firm that has protected over $3 trillion in user assets – reveals concerning vulnerabilities that could put these newcomers’ investments at immediate risk.
Dr. Ronghui Gu, Columbia University Professor and co-founder of CertiK, has identified several critical findings.
While Bitcoin’s price movements are making headlines, CertiK’s latest research shows popular crypto wallet software uses security measures 99% weaker than mainstream financial apps.
First-time investors are particularly vulnerable to security pitfalls. Moreover, cryptocurrency holders increased by 143 million in 2023 alone, with many newcomers unaware of these risks.
In fact, nearly 30% of legitimate crypto wallet software triggers malware warnings, creating a confusing environment where new investors struggle to distinguish between genuine and fraudulent investment tools.
Dr. Gu, whose company CertiK is backed by Goldman Sachs, Coinbase Ventures and other investment firms, talked about essential security guidance for new crypto investors attracted by recent price movements.
As covered, CertiK is a firm focused on blockchain security, leveraging best-in-class AI technology to protect and monitor blockchain protocols and smart contracts.
Founded in 2018 by professors from Yale University and Columbia University, CertiK’s mission is to secure the web3 world.
CertiK applies innovations from academia to enterprise, enabling mission-critical applications to scale with safety and correctness.
To date, CertiK has worked with around 4,000 Enterprise clients.
Their clients include projects such as Aave, Polygon, Binance Smart Chain, Terra, Yearn, and Chiliz.
CertiK is backed by Insight, Partners, Sequoia, Tiger Global, Coatue Management, Lightspeed, Advent International, SoftBank, Hillhouse Capital, Goldman Sachs, Coinbase Ventures, Binance, Shunwei Capital, IDG Capital, Wing, Legend Star, Danhua Capital and other investors.
Our discussion with Dr. Ronghui Gu is shared below.
Crowdfund Insider: What has caused Bitcoin’s recent post-election surge, and what are its broader implications?
Ronghui Gu: Bitcoin’s post-election surge has reignited global enthusiasm for cryptocurrency, attracting thousands of first-time investors. This resurgence stems from widespread economic concerns such as inflation fears, fiscal uncertainty, and growing mistrust in traditional finance systems. Bitcoin’s decentralized and borderless nature positions it as a hedge against these uncertainties, often referred to as “digital gold” for the modern age.
However, the surge is a double-edged sword. While it introduces new participants to the transformative potential of cryptocurrencies, it also brings an influx of inexperienced investors into a highly volatile and often perilous market. Many lack familiarity with the technical intricacies of managing digital assets, leaving them vulnerable to scammers and cybercriminals who have turned this boom into a lucrative opportunity.
Crowdfund Insider: What risks do new crypto investors face in this evolving landscape?
Ronghui Gu: For first-time investors, the crypto space presents several significant threats. Phishing attacks are one of the most common, with fraudsters impersonating wallet providers or exchanges to trick investors into revealing private keys.
Malware-infected wallets, often poorly vetted or outright malicious apps, can steal private keys or seed phrases upon entry. Social engineering scams exploit the decentralized nature of crypto, as fraudsters pose as tech support or influencers to prey on users. Spoofing and fake apps—counterfeit versions of popular wallets or exchanges—deceive users into handing over credentials.
Rug pulls and fake projects lure investors with promises of high returns only to vanish with their funds, especially in decentralized finance (DeFi). Lastly, man-in-the-middle attacks in public Wi-Fi environments intercept communications between users and their wallets or exchanges, exposing sensitive data.
Crowdfund Insider: How can new and experienced investors protect themselves against these threats?
Ronghui Gu: Despite the challenges, investors can take proactive steps to secure their digital assets. Using hardware wallets instead of software wallets is an essential first step; hardware wallets store private keys offline, adding a significant layer of security.
Enabling two-factor authentication (2FA) further reduces unauthorized access risks, particularly when using app-based 2FA instead of SMS-based options to avoid SIM-swapping attacks.
Choosing reputable wallet providers is critical—investors should download wallets only from official websites or app stores, carefully researching user reviews and ensuring the provider has undergone security audits. Regularly updating wallets and devices ensures security patches address vulnerabilities.
Finally, staying informed is a key defense; following trusted sources like exchange blogs, security firms, and industry leaders helps users keep up with emerging risks and best practices.
Crowdfund Insider: How does this influx of new investors challenge the broader crypto ecosystem?
Ronghui Gu: The surge in crypto adoption has created new pressures on the ecosystem, highlighting several challenges. Exchanges face increased transaction volumes and account registrations, raising the stakes for operational security and increasing the risk of phishing emails and similar scams.
Wallet providers must balance user-friendly designs with robust security, as many prioritize accessibility over features like encryption or multi-signature functionality, leaving new investors vulnerable.
Additionally, cybercriminals are evolving their tactics to exploit less experienced investors who may not recognize scams, creating fertile ground for fraud. These challenges demand swift action from the industry to fortify security infrastructure and prioritize user education.
Crowdfund Insider: What does this growth signify for the future of cryptocurrency?
Ronghui Gu: The wave of new investors signals increasing mainstream acceptance of digital assets, highlighting the growing role of cryptocurrencies in the global financial system.
This momentum is a double-edged sword: while it showcases crypto’s potential to transform finance, it also underscores the urgent need for better security measures and educational initiatives to protect a rapidly expanding user base.
Exchanges, wallet providers, and other ecosystem participants must rise to the occasion by balancing usability and robust security measures. By doing so, the industry can continue to evolve, maintaining user confidence and safeguarding the integrity of the crypto market.
Crowdfund Insider: Why is it crucial to secure a place in the crypto ecosystem now?
Ronghui Gu: Cryptocurrency represents more than just an investment—it’s a gateway to a financial revolution that empowers individuals to take control of their assets, free from traditional intermediaries. With empowerment comes responsibility, and both investors and industry players must adopt a proactive approach to security.
While the crypto market matures, its participants must evolve alongside it. By fostering a secure and informed community, the industry can ensure that this transformative technology reaches its full potential, reshaping the global financial landscape for the better.