On Tuesday, a Cloudflare outage knocked out numerous popular web services, including big crypto exchanges FTX, OKX, and Bitfinex. Users attempting to visit certain websites were met with a “500 Internal Server Error” notice, raising questions about the security of centralized crypto platforms.
The content delivery network (CDN) confirmed via an update posted on June 21 that it is experiencing issues with its services and network, and a fix is currently being implemented. However, the firm has yet to provide information regarding what went wrong, causing services across the world to come to a halt.
The world’s second-largest crypto exchange FTX tweeted that it briefly went into the “post-only” trading mode when it became inaccessible during the outage. The mode ensures that an order is placed only if it’s an order by a “maker,” which is someone who sets a price to buy or sell.
Crypto exchange Bitfinex and blockchain explorer Etherscan also tweeted about their website being unavailable. Many services affected by the Cloudflare incident were back online within two hours.
Cloudflare, which became public about three years ago, offers web network infrastructure to businesses, allowing them to publish their material online. The infrastructure also provides security services, including distributed denial of service protection (DDoS).
Although the scale of losses caused by the outage is still unclear, advocates of decentralization have long warned of the risk of keeping one’s funds on centralized crypto exchanges, which act as escrows for customers and tout their more user-friendly features. They are more akin to traditional banks or asset exchanges, which are regulated in the jurisdictions they are permitted to operate.
Centralized exchanges are held accountable by regulators; however, some argue that they are more susceptible to hacks because they are responsible for large volumes of trades and store most of them on their own servers.
On the other hand, users who conduct peer-to-peer transactions automated by smart contracts are supposed to be at reduced security risks because even when the decentralized exchange is hacked, the funds are in users’ self-custodian wallets rather than with the platform.