Twitter Space Recap, Another Collapse in Centralized Custody? Is Your Asset Safe?

On the evening of June 9, 2023, at 8 p.m., we held a discussion on Twitter Space with the theme “Another Collapse in Centralized Custody? Is Your Asset Safe?” We were honored to invite product experts from Cregis, industry KOLs, and retail investors to discuss the demand for self-custody solutions. Our distinguished guests included CMO @CregisMarco, Clark Lee @CoffeeM31531711Cregis Research’s chief technologist, Jayson @jaysonhu2018 Trader, Lightning HSL @lightningHSL early blockchain evangelist/ Crypto OG, Guest @bitcoinyike early Bitcoin investor/ Crypto OG, King @Pompeii2077 Trader, and Arrow Go2Mars Founder @ArrowCrypto_eth.

The focus of this discussion was the logic behind crypto asset custody security. Recently, black swan events on centralized platforms have been frequent, leading to an increasing demand for self-custody solutions for crypto assets, making this issue particularly significant. Our discussion mainly revolved around how to protect asset security to cope with potential risks of custodian collapse, and we also explored the collective demand for ideal trading/security products, compared the pros and cons of centralized and decentralized asset management platforms, and understood how platforms like Cregis support cryptocurrency participants in this context.

During the discussion, guests shared their views and suggestions. They all agreed that only those who truly possess the private key can control the assets. Therefore, over-reliance on any centralized asset custody institutions may bring risks. Crypto OG & early blockchain evangelist Lightning HSL believes that the collapse of large asset custodians could cause a sharp drop in market confidence and prices. He suggests individuals and businesses maintain sufficient cash flow and avoid leveraging to handle these risks. He pointed out that in both centralized and decentralized environments, legal accountability may deter financial crime but could also increase market costs, leading to market collapse. He emphasized that decentralizing power and avoiding single point failures is key when choosing trading and security products. Finally, he believes that popularizing safety education and promoting products are important help and support that can be provided in complex market environments for both centralized and decentralized asset management platforms.

Cregis’s Chief Scientist Clark Lee believes: In the crypto industry, owning the private key means owning control of the funds. Therefore, any dependence on centralized asset custody institutions poses a risk, as like traditional banks, these institutions can also go bankrupt. Therefore, he strongly advocates that individuals and businesses should not overly rely on centralized institutions such as centralized exchanges or custodial wallets but pursue more decentralized ways of asset management. He believes that in this emerging field, self-custody and self-protection are key, as they can ensure fund security and financial freedom to the greatest extent.

Go2Mars Founder Arrow suggests: For asset management, he advises selecting the right way according to the scale of assets. Large funds need safer, more diversified management methods, while small funds can be managed relatively casually.

Crypto OG & early Bitcoin investor Guest yike believes: Investors should adopt a cautious attitude when facing news of centralized exchange collapses, “better safe than sorry”. He emphasizes that for storing cryptocurrencies, investors should choose ways they believe are safe and reliable. He advises investors to research and understand the pros and cons of various storage methods themselves, and choose the asset storage method that suits them best based on their needs and risk tolerance.

Trader King believes: In the face of possible collapse events in centralized exchanges, investors need to establish their own warning systems and effectively manage risks. He emphasizes that different market environments, such as bull and bear markets, should adopt different risk control strategies. By establishing their own warning systems and risk management strategies, investors can better cope with potential collapse events in centralized exchanges, thus protecting the safety of their assets.

During the 2-hour Twitter Space conversation, Cregis’s Chief Scientist Dr. Lee provided a series of in-depth views on recent hints in a tweet by Bitcoin Magazine CEO David Bailey suggesting potential risks with mainstream custodians and the risks of crypto fund custody. He believes that any centralized asset management institution, whether it’s an exchange, wallet, or company, has potential risks, including fraud and bankruptcy. In this context, self-custody wallets, especially those using Multi-Party Computation (MPC) technology, provide users with a way to control their assets autonomously, effectively reducing these risks. He also emphasized that only those who truly hold the private key have control over their assets, and over-reliance on any centralized asset custody institutions may pose risks.

Dr. Lee indicates that Cregis, as a unique platform, uses advanced Multi-Party Computation (MPC) and Self-Custody+TEE technology to ensure user shard security. Cregis’s operating mechanism doesn’t touch user keys and doesn’t give shards to any third-party custody, truly achieving self-management of crypto assets, improving asset security and privacy protection. TEE is a secure area isolated from the ordinary memory environment, effectively reducing in-memory security risks. When signing a transaction, multiple shards are computed in TEE, achieving isolation and protection of the core transaction stage. Thus, Cregis users’ assets are difficult to lose due to third-party malicious behavior.