QUADRIGA INITIATIVE
CRYPTO WATCHDOG & FRAUD RECOVERY PLATFORM
A COMMUNITY-BASED, NOT-FOR-PROFIT
Lightweight And Comprehensive Cryptocurrency Exchange Framework
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Typical securities frameworks will cost Canadians millions of dollars.
Implementation costs of our proposed framework are significantly cheaper.
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The framework was developed through an in-depth multi-year case study of 109 past exchange hack/scam/fraud events.
It prevents all historic cases where funds were lost in cryptocurrency exchanges.
We can maintain a diverse set of exchange platforms, keep small platforms we know and love, and encourage innovation while keeping Canadians safe.
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This framework fully protects Canadians traders and fully supports innovation.
SARBANES-OXLEY | $5M USD / YEAR / FIRM
Offline
Multi-Signature
Effective standards to prevent both internal and external theft. Platform operators are trained and certified, and have a legal responsibility to users.
Regular Transparent Reviews
Provides visibility to Canadians that their funds are fully backed on the platform, while protecting privacy and sensitive platform information.
Comprehensive Insurance
Full support for hot wallets to automate and speed up user withdrawals, while fully removing risk to platform users through comprehensive insurance.
Proper multi-signature
cold wallet storage
1.
Each cold storage private key is the personal and legal responsibility of one person - the “signatory”. Signatories have special rights and responsibilities to protect user assets. Signatories are trained and certified through a course covering (1) past hacking and fraud cases, (2) proper and secure key generation, and (3) proper safekeeping of private keys. All private keys must be generated and stored 100% offline. If a private keys is ever breached or suspected to be breached, the wallet must be regenerated and all funds relocated to a new wallet.
2.
All signatories must be separate background-checked individuals free of past criminal conviction. Signing of transactions must take place with all signatories on Canadian soil or on the soil of a country with a solid legal system which agrees to uphold and support these rules (from an established white-list of countries which expands over time).
3.
3-5 independent signatures are required for any withdrawal. There must be 1-3 spare signatories, and a maximum of 7 total signatories. The following are all valid combinations: 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7.
4.
A security assessment should be conducted to validate the cold wallet is set up correctly and provide any additional pertinent information. The primary purpose is to ensure that all signatories are acting independently and using best practices for private key storage. A report summarizing all steps taken and who did the assessment will be made public.
5.
There is an approval process if signatories wish to visit non-compliant countries. At most 2 signatories can be outside of aligned jurisdiction at any given time. Non-compliant countries would be required to keep a separate cold wallet for Canadian funds within a Canadian office if they wish to serve Canadian customers.
Regular and transparent solvency reviews
1.
Reputable individuals and entities in Canada serve as "reviewers", whose job is to validate the backing and assess the platforms to ensure 100% backing of customer assets. Reviewers obtain tiers based on performing a number of reviews, time as a reviewer, and other credentials such as accounting backgrounds.
2.
A review must be conducted at founding, after 3 months of operation, and at least once every 6 months to compare customer balances against all stored cryptocurrency and fiat balances. The reviewer will be known, independent, and never repeat within a 14 month period. Larger platforms (more assets) will require reviews from higher tier reviewers.
3.
3-5 independent signatures are required for any withdrawal. There must be 1-3 spare signatories, and a maximum of 7 total signatories. The following are all valid combinations: 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7.
4.
A security assessment should be conducted to validate the cold wallet is set up correctly and provide any additional pertinent information. The primary purpose is to ensure that all signatories are acting independently and using best practices for private key storage. A report summarizing all steps taken and who did the assessment will be made public.
5.
There is an approval process if signatories wish to visit non-compliant countries. At most 2 signatories can be outside of aligned jurisdiction at any given time. Non-compliant countries would be required to keep a separate cold wallet for Canadian funds within a Canadian office if they wish to serve Canadian customers.
THREE KEY ELEMENTS
Comprehensive Insurance
1.
Each cold storage private key is the personal and legal responsibility of one person - the “signatory”. Signatories have special rights and responsibilities to protect user assets. Signatories are trained and certified through a course covering (1) past hacking and fraud cases, (2) proper and secure key generation, and (3) proper safekeeping of private keys. All private keys must be generated and stored 100% offline. If a private keys is ever breached or suspected to be breached, the wallet must be regenerated and all funds relocated to a new wallet.
2.
All signatories must be separate background-checked individuals free of past criminal conviction. Signing of transactions must take place with all signatories on Canadian soil or on the soil of a country with a solid legal system which agrees to uphold and support these rules (from an established white-list of countries which expands over time).
3.
3-5 independent signatures are required for any withdrawal. There must be 1-3 spare signatories, and a maximum of 7 total signatories. The following are all valid combinations: 3of4, 3of5, 3of6, 4of5, 4of6, 4of7, 5of6, or 5of7.
4.
A security assessment should be conducted to validate the cold wallet is set up correctly and provide any additional pertinent information. The primary purpose is to ensure that all signatories are acting independently and using best practices for private key storage. A report summarizing all steps taken and who did the assessment will be made public.
5.
There is an approval process if signatories wish to visit non-compliant countries. At most 2 signatories can be outside of aligned jurisdiction at any given time. Non-compliant countries would be required to keep a separate cold wallet for Canadian funds within a Canadian office if they wish to serve Canadian customers.
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We are calling on regulators, Canadian crypto users, and exchange platforms to provide feedback and support for our proposal.
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Please join our discussion and help us build a future that works for everyone and that we can all be excited about.
