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Cregis Research: A Major Centralized Asset Custody Crisis is Looming!

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Recently, a shocking news came from the cryptocurrency field. David Bailey, CEO of Bitcoin Magazine, posted a thought-provoking tweet on Twitter, saying: “Major custodian about to declare bankruptcy unless bailed out at the last minute. Take your Bitcoin off exchanges, even bitcoin-only platforms.”

(David Bailey‘s tweets)

This tweet undoubtedly hints at a horrifying situation: mainstream custodians may face severe risks, and the safety of assets is worrying. Netizens speculated whether David’s warning was implying Fireblocks and Prime Trust, two influential custodian companies in the industry.

(Netizens guess prime trust)

There were claims that Swan’s assets were transferred from Prime Trust to Fortress and Bitgo, and Swan’s CEO Cory Klippsten replied that all of Swan’s BTC and USD will be custodied by Fortress and Bitgo, and they continue to recommend self-custody of assets.

(swan ceo recommends asset self-custody)

We also saw an upgrade announcement on Swan’s official website. The custodian of Swan customers’ assets has changed. All Swan customers’ BTC and USD are now custodied by Fortress and Bitgo.

(Swan Bitcoin Upgrade Announcement)

In the face of this centralized custody dilemma, is your asset still safe?

Centralized custodians have always been seen as a safeguard for asset security. They are responsible for storing and protecting users’ cryptocurrencies. However, when these centralized institutions encounter problems, such as bankruptcy or internal management issues, the safety of users’ assets will face serious threats. Users cannot control their own private keys, so they cannot fully control their own assets, and this risk is greatly amplified.

At this time, self-custody cryptocurrency wallets become extremely important. Self-custody wallets not only allow users to fully control their own private keys but also ensure the security of assets under any circumstances. They give users complete control, thereby eliminating the risks caused by problems with centralized custody institutions.

So, how to choose a safe and reliable self-custody wallet?

  1. How does Cregis respond to the custodian crash?

Cregis digital asset self-custody wallet uses the latest multi-party computation (MPC) and self-custody+TEE technology to ensure user shard security, truly achieving self-custody of crypto assets. Our users fully control their shards of private key and thus have complete control over their assets. Even in the worst-case scenario, such as the custodian bankruptcy warned about by David Bailey today, the user’s assets are still safe.

  1. How does Cregis respond to hacker attacks?

Another benefit of using an MPC self-custody wallet is that even if hackers somehow manage to break into a single MPC node, they cannot know the collective output value of all nodes. To control a wallet protected by MPC, they theoretically need to attack the total number of devices required for signing transactions simultaneously.

For example, if the number of shards is 10 and the threshold for signing transactions is 5, then the attacker will need to break into 5 or more storage locations and steal shards of private key. Proactive security measures (such as automatic key rotation that moves and updates sensitive private key materials between nodes) make this more difficult. Currently, Cregis uses this measure, and users can update new shards by resetting shards, thereby improving security.

Assuming that MPC is implemented on secure hardware, this simultaneous attack in multiple aspects makes MPC more secure than other private key storage methods (such as hot wallets and cold wallets with single point failures). Moreover, the flexible governance supported by MPC reduces the possibility of rogue personnel accessing the wallet and taking away assets.

  1. How does Cregis prevent physical attacks and software vulnerabilities?

Cregis combines 3 types of TEE (SGX, TrustZone, and Nitro) to create a comprehensive encrypted isolation environment. This environment is separated from external memory and is able to effectively reduce associated security risks.. When the transaction is signed, multiple shards are calculated in the TEE to realize the isolation and protection of the core link of the transaction. Therefore, it is difficult for the assets of cregis users to be lost due to malicious actions of third parties.

Not only that, Cregis has also been actively responding to the challenges of the industry. Our team is constantly researching changes in the market, looking for the latest technologies to provide the safest and most convenient cryptocurrency self-custody solutions. In this ever-changing crypto world, let’s make smarter decisions for the security of our assets. Let’s choose Cregis to truly control our own assets and resist unknown risks.

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