Cryptocurrency exchange Shakepay, which calls itself “the platform for buy bitcoin Canada's fastest growing ", conducted a proof-of-reserve audit and acquired an insurance policy to bolster its security, perhaps learning lessons from other Canadian platforms QuadrigaCX, Einstein and Coinsquare, which have lost their client funds or have been involved in several scandals in the past 20 months.
Shakepay gets to safety
The Montreal-based cryptocurrency exchange has hired blockchain forensics firm CipherBlade to conduct a full audit of its reserves and security policies. To safeguard its clients' funds, the exchange also contacted a third-party custodian agency and secured a specific insurance policy for its cold wallets with Aon, underwritten by insurers with Lloyd's of London, the exchange announced. .
Shakepay CEO Jean Amiouny said the exchange supports the buying and selling of bitcoin, but tries not to hold onto its clients' crypto holdings longer than necessary.
This reduces the risk of client funds being stolen if the exchange is compromised. The exchange originally offered a bitcoin debit card, but withdrew this feature after its issuer encountered some issues. In 2018, the company switched to buying and selling bitcoin and just passed 100.000 users, he said.
"Proof-of-reserve"
According to CipherBlade's audit report, Shakepay reserves the assets of its customers completely on paper. “There was a 100% match between the transaction data found in the backend systems and the amounts credited to user accounts versus the actual transaction amounts observed on the Bitcoin and Ethereum blockchains (for cryptocurrency transactions) and bank account records (for legal transactions) observed in all transactions, ”the report states.
CipherBlade worked with Shakepay's custodian and financial institutions to verify these figures, Amiouny said. Shakepay's new insurance covers all funds held in cold storage, which means it covers "the physical theft of media where private keys are kept," he said.
Cold storage, in turn, is provided by a regulated cryptocurrency custody provider in the United States. Amiouny refused to specify the name of that provider, citing security concerns.
What Shakepay's new policy doesn't provide is individual insurance. The exchange also asked CipherBlade to evaluate the exchange's personnel and security processes, creating a tiered access system to ensure employees have access only to the tools they need to do their jobs.
However, CipherBlade says "there is no evidence" to indicate that Shakepay employees could steal or otherwise divert funds from the exchange, citing the criminal background checks that were provided. The exchange is currently only available in Canada, with no plans for expansion to other countries, Amiouny said.
