Curriculum·Graduate·G401
Custody Operations and Key Ceremonies
QuadrigaCX, 2019. Canada's largest cryptocurrency exchange collapsed after its founder, Gerald Cotten, died in December 2018 as, the company said, the only person with the keys to its cold wallets, and about 184 million Canadian dollars in customer crypto was declared inaccessible.
Lesson 1 opens on
QuadrigaCX, 2019
QuadrigaCX was Canada's largest cryptocurrency exchange. In December 2018 its founder, Gerald Cotten, died, and the company stated he had been the only person with the keys to its cold wallets, so the roughly 184 million Canadian dollars of customer crypto thought to be in those wallets was declared inaccessible. The cold wallets were found to have been emptied before Cotten died, most of them in April 2018, and staff of the Ontario Securities Commission concluded the exchange had in truth operated like a Ponzi scheme: clients lost at least 169 million Canadian dollars, most of the shortfall caused by Cotten's fraudulent conduct, the bulk of it his own trading on the Quadriga platform, and not by a lost key.
The lessons
- G401-01The single key, and QuadrigaCXState why a single key holder is a single point of failure for an institution, not a convenienceabout 31 min · opens on QuadrigaCX, 2019
- G401-02The key ceremonyExplain what a key ceremony is and why a key's security is fixed at the moment it is generatedabout 31 min · opens on Profanity vanity addresses and Wintermute, September 2022
- G401-03Multisig governance for an institutionExplain that a multisig's security is its threshold and the independence of its signers, not the number of keysabout 31 min · opens on Harmony Horizon bridge, June 2022
- G401-04MPC and the shape of key materialExplain what multi-party computation custody does: sign jointly from key shares, with no full key ever assembledabout 31 min · opens on TSSHOCK threshold-signature disclosures, 2023