Quote from: nenzo007 on March 26, 2014, 10:27:09 PM

FYI: The exchange CryptoRush.in has problems. Losing millions of BlackCoins: http://www.cryptocoinsnews.com/2014/03/25/cryptorush-loses-millions-of-blackcoins/

It turns out that crypto currency exchange business is a dangerous thing. I've read the post you mentioned and a related IRC conversation. As I understand it, CryptoRush.in developers chose an uncommon and really tricky practice of accounting customers' funds. It seems like every customer was assigned its own BlackCoin daemon and the exchange developers relied solely on what these daemons reported to their exchange. The last BlackCoin wallet/daemon update they installed had a bug which caused the daemons to report a wrong (much higher) account balance. So, many users exploited this flaw to convert their non-existent BlackCoins to whatever else to withdraw. So, the exchange has lost a lot of money.

The exchange owners must rely on their own accounting and not on what daemons report to them. But even in this case they are not safe. Alt coins are so rapidly emerging so it is impossible for open source community to control their code. Bitcoin team never accepts a code modification until it is checked 100 times by the community. As for alt coins, they are mostly developed by a few people who can do whatever they want. They can make a mistake or even introduce an exploit intentionally. Lets say an exploit which confirms a wrong (much much higher) transaction value to its recipient. Lets say "if a sender's address is such and such than report to the recipient a much higher value, while reporting the correct value to everyone else". Once such transaction enters an exchange one can steal a lot of money.

The conclusion: exchanges must be very careful with choosing coins they trade. They mustn't rely on wallets and what they report. Once a transaction is received they must use a 3rd party software (or at least another wallet) to check the transaction. The whole block chain must be analyzed to the very time a coin was mined.