Is Coinmama Safe?

James HeadshotAuthor: James Page
Last Updated: November 2020

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Choosing the right crypto exchange is never an easy task. There are a lot of features you should take into account, starting from the platform’s liquidity, market cap, and trading volumes, to the cryptos it supports, payment methods, fees, and trading options it offers.

However, if you’re planning to get involved in a market as risky and volatile as the crypto market, you better pay extra attention to the platform’s level of security. In recent years, there has been a surge in fraudulent activities online, most of them targeting liquid exchanges.

To attract more traders and reassure them in their reliability, crypto exchanges are generally open about the security methods they use. You can easily find information about them on the platform’s official website, typically in the support section/help center.

Our team has done its research and today, we’ll present to you the safety features provided by a popular Israeli-based crypto brokerage called Coinmama. Let’s get started!

What’s Coinmama?

Coinmama is one of the leading cryptocurrency exchanges, launched in Israel in 2013. The platform is actually registered in Bratislava, Slovakia because it’s owned by NBV International, a subsidiary of the Israeli company New Bit Ventures Financial Services.

Unlike regular centralized exchanges, Coinmama was envisioned as a brokerage, i.e. a buy-only outlet for users who want to purchase some of the most popular cryptocurrencies supported by the platform: Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Ripple, Litecoin, Cardano, and Qtum.

coinmama logo

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For now, as we said, you are only allowed to buy these coins, but the Coinmama team might add the option to sell them in the future. Another thing this platform is famous for is being the first brokerage to accept credit and debit card purchases.

What you should keep in mind is that the cards need to be issued by Visa or Mastercard and that card purchases incur an additional 5% transaction fee. Coinmama doesn’t provide its own wallet where customers can store their cryptocurrencies so if you want to use the exchange, make sure you find a secure third-party wallet in advance.

Platform Security

Every time you’re looking into the specifics of any crypto exchange, it’s useful to check whether the platform has been licensed by any financial regulator or not. Coinmama, for example, is registered with the Financial Crimes Enforcement Network (FinCEN), a reputable US regulatory body investigating fraudulent activities, including money laundering and tax evasion.

This means that Coinmama adheres to FinCEN’s AML and KYC policies and investigates any suspicious trading activity. However, being a brokerage, Coinmama doesn’t require users to provide a lot of personal details when registering for an account as the platform keeps neither users’ coins on-hand nor does it store their card/bank information.

To start trading, you only need to provide a copy of one legitimate government-issued ID. This can be a national ID or an international passport. This “Level 1 Verification” includes a daily limit of only $5,000.

If you’re looking to trade larger sums, you should upgrade your verification to Level 2 or 3 to unlock higher tiers. This is done by providing additional information about your whereabouts: another ID card, utility bill (electric, gas, water bill, etc), or a bank/credit card statement no more than 6 months old.

Dealing With a Major Security Breach

On February 15, 2019, Coinmama reported a major security breach in which around 450,000 user accounts had been affected. The incident wasn’t exclusive to the exchange as over 24 other companies suffered in the multi-platform hack.

Coinmama announced that the hackers gained access over user emails and hashed passwords that have been filtered through the platform in 2017. Immediately, Coinmama formed an Incident Response Team to investigate the attack together with renowned security firms.

To protect their users’ privacy, Coinmama sent emails to affected customers to inform them about the incident. The platform urged them to set a new password for their account and check whether they’ve been using the previous one on any other platform and choose a new one there as well.

In addition, Coinmama notified the law enforcement authorities and continued the investigation and monitoring of suspicious activities. From then on, there have been no other security breaches on Coinmama.

Account Security

Coimama puts traders in charge of their own finances and cryptocurrencies. Instead of taking an enormous responsibility by storing and keeping users’ funds in some kind of software wallet and then transferring them into offline wallets for better safety, the brokerage lets them choose a reliable wallet on their own.

Even so, Coinmama features a number of blog posts and articles with useful advice on what users can do to protect their cryptocurrencies and wallet address.

The number one priority, according to Coinmama, is to enable the two-factor authentication (2FA) on the wallet they’re using. They can download an Authenticator App to their mobile device or computer which generates one-time passcodes for every new login.

Moreover, the platform reminds users to store their wallet’s seed phrases and private keys somewhere really safe, as anyone who gains access to them automatically gains access to the wallet balance.

Conclusion

We’ve come to the end of our review on Coinmama’s safety. Although the final decision is yours to make, we hope we could help with our thorough examination.

While it’s true that compared to other crypto exchanges, Coinmama employs fewer security features, this is only because Coinmama is a brokerage with no wallet services. Moreover, the platform keeps no customer details in its records.

Apart from the security breach that took place in 2019 and was resolved in a prompt and transparent manner, we must say that we’ve found no other complaints aimed towards the level of security provided by Coinmama.

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About The Author

James Page

James Headshot

James is the main editor. With a passion for finance and anything blockchain, cryptocurrency is right up his alley. He's responsible for most of the content on the site, trying his best to keep everything up to date and as informative as possible.

Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.