Elon Musk recently interacted with a crypto wallet provider. However, the company’s marketing method backfired and the Tesla boss eventually criticized the firm. Freewallet is a hosted crypto wallet service that is known for offering standalone storage services for various cryptos.
Freewallet saw its marketing attempt rebuffed by Elon Musk and while responding to the self-promotional message, the CEO retorted:
Any crypto wallet that won’t give you your private keys should be avoided at all costs
— Elon Musk (@elonmusk) February 10, 2021
Hosted cryptocurrency wallet platforms are normally targets for criticism over the storage of user’s private keys. That policy flies in the face of the “not your keys, not your coins” ethos which is mostly supported by crypto purists.
Through the storage of private keys on third-day platforms, the crypto owners run the risk of rogue actors that gain access to the sensitive bit of information, in turn, compromising their wallets in the process.
On its part, Freewallet has responded to the negative views projected by the wallet’s critics. Based on the company’s report, being a hosted wallet enables the provision of “bank-level” services in terms of security and customer support:
“The accusations relating to this fact are never followed by a support ticket. People saying ‘stay away from Freewallet’ express prejudice towards custodial wallets because they believe that a ‘true’ blockchain wallet is supposed to leave the management of private keys to the user (no). However, there are other services (like exchanges) that have access to user private keys.”
Despite all that hype for using self-hosted crypto storage, investors still seem to prefer trusting their coins to third-party service providers. Based on previous reports, 92% of the institutional investors keep their cryptos on exchanges.
While crypto exchange hacks are not as common as they were in the past, some of the sites still fall victim to cybercriminals. Sometime in 2021, suspected North Korean hackers stole almost $285 million from KuCoin.
KuCoin did allegedly recover around 84% of the stolen funds through a collaborative effort with law enforcement agencies and other crypto exchanges. The platform also used its insurance fund to cover the deficit realized from the incident.
In the meantime, the self-hosted wallets are becoming subjects of government attention, particularly in the US. In late 2021, the US Treasury proposed using Know Your Customer rules for withdrawals from crypto exchanges to unhosted wallets.