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Customers who are stupid enough to leave funds to the Canadian crypto exchange QuadrigaCX have something to worry about. According to a message from the company's board of directors, the platform lost access to digital resources stored in a cold room.
Although the exchange was only minimal in terms of daily active users, according to Coinmarketcap figures, the news again underscores the importance that it is incumbent on users to understand. take responsibility for storing their own digital badets safely.
Not your keys, not your crypto
Less than a month after billionaire and former Bitcoin evangelist Trace Mayer organized the first "Proof-of-Keys" event as a demonstration of monetary sovereignty, a Canadian center for Cryptography called QuadrigaCX has made the ultimate mistake: losing access to its own cold storage.
Let's start a new #Bitcoin cultural tradition.
An annual celebration of key evidence on January 3 to declare monetary sovereignty by withdrawing $ BTC We control private keys and build consensus on the network.
Who is w / me? ? https://t.co/sJhOYSjStH pic.twitter.com/ve9DBsQhh9
– Trace Mayer (@TraceMayer) December 9, 2018
The QuadrigaCX exchange was taken offline a few days ago. Maintenance issues were cited as the reason behind the downtime. However, it has since become apparent that the story went further than the routine work on the site.
According to a QuadrigaCX board message, the cryptographic exchange is facing "significant financial problems" that have impacted the service received by its users. The Nova Scotia Supreme Court will appoint an independent third party, Ernst & Young Inc., to oversee creditor protection proceedings next month.
The board's note goes on to say that efforts have been made to address the liquidity problems that hinder the operation of the company. Then comes the really shocking admission – QuadrigaCX can not access its own cold room:
"Over the last few weeks, we have worked hard to solve our liquidity problems, including trying to locate and secure our very large cryptocurrency reserves in cold portfolios … Unfortunately, these efforts have not been successful. "
The message concludes by indicating that QuadrigaCX will update its users as a result of the February 5 hearing.
The number of QuadrigaCX users affected by the monumental gaffe does not seem huge, as the stock market sells less than $ 500,000 in trading volume for all trading pairs in the last 24 hours of trading. However, aside from the numbers, the news could not have highlighted Mayer's point on the occasion of Bitcoin's tenth anniversary.
Cryptographic exchanges are the riskiest places to store digital currency. They pose all kinds of dangers to users. To our knowledge, the example of QuadrigaCX is the first of a trading platform to simply lose access to its own cold storage solution. Trade piracy is much more common – recent examples include Coinrail in South Korea and Zaif in Japan.
Trade itself is another risk for those who decide to give up their own financial responsibility to an unregulated and largely unknown company. Indeed, early crypto exchange, Mt. Gox's collapsed because of a spectacular mismanagement of clients' funds.
Being almost entirely unregulated, there is very little recourse if any of these overly common events is responsible for the loss of your digital badets.
Traders have little choice but to leave a cryptocurrency on the stock market long enough for it to be considered risky. However, they can minimize the risk of losing funds by making withdrawals after each session and keeping only a small percentage of their total holdings in an active online portfolio.
Meanwhile, investors, or holders, literally have no excuse for entrusting their cryptography to a potentially daunting company, which they know very little about. Bitcoin and other digital resources have the potential to give great freedom to the entire planet. However, with such freedom comes the responsibility – the main one of which is to make sure that you and only you know the private key of your chosen encrypted storage solution.
Related reading: Japan creates regulatory body to prevent piracy trade in cryptocurrencies
Featured image of Shutterstock.
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