Never share your password. It’s IT security 101, drilled into the blue from day dot. But a Canadian tech company has been brought to its knees by just the opposite.
- Canada’s largest cryptocurrency company QuadrigaCX is unable to access more than CAD $ 250 million in customers’ funds after its expired.
- CEO Gerald Cotten had the only password to an encrypted laptop designed to protect sophisticated hacking attempts. Repeated attempts to recover the password have failed, with the funds held in offline accounts referred to as ‘cold storage’.
- There were previous signals that QuadrigaCX was facing liquidity troubles, with several of its bank accounts frozen a year before in January 2018, and withdrawals cash. The company filed for protection from creditors on 31 January 2019.
- The demise of QuadrigaCX has raised calls for increased regulation of fintech operators, and questions about how to do so in advanced technology could be the basics so wrong. Online speculation is that it may be more than meets the eye.
- In a 2014 interview , Gerald Cotten discussed the lack of cryptocurrency regulation and its impact on the business, saying:
“From an exchange point of view, this is quite frustrating, because you are trying to figure out what the regulations are. We’re quite proactive when it comes to regulations. We do not want to break the law. We want to comply, and we are more than compliant with what are the current laws. So, a bit more clarification from FINTRAC and from the federal government would be very useful – just in terms of planning our business for the future. “
Investors Must Be Wishing Cotten has put some of those plans into action.
What it means for you
Business continuity planning is essential
All organizations, however small, should take steps to protect their assets. But if their business is other people’s money, there is no excuse for inadequate risk management. Having a backup plan for what to do in a crisis is essential. Who wants to use it.
Nobody is an island
One of a CEO’s key responsibilities is to make sure the business can survive in their absence. Being indispensable is not a sign of value to organization – it’s a sign of poor planning and inadequate delegation. At its worst, it can perpetuate hubris and conceal impropriety.
Do not ignore red flags
The banking issues at QuadrigaCX at the start of 2018 should have been a signal to directors, owners and regulators that something amiss and to dig deeper. Ongoing delays for customers to access their cash.
Consider counterparty risk
Whether you’re honoring a contract, making an investment or hiring an employee, doing your due diligence in advance. Checking their capacity to deliver, their credentials and their insurance can help protect you from unpleasant surprises later.
Password support, anytime and anywhere
When they come to board papers, directors need confidence. Their preparation often occurs outside of business hours and away from office facilities. Forgetting a password or experiencing an IT issue can cause delays and frustration.
Diligent can help. Our technical support team is available around the clock, every day of the week, every week of the year. We answer your call within seconds, and 98% of requests are resolved in the same conversation.
Combined with robust, industry-leading security, Diligent Boards enables directors to seamlessly access and review information and engage in critical business issues, wherever they are in the world.
September 7, 2020
Avoiding Cyber Confusion in the Board Room
It is imperative that Directors understand the cyber risks facing their companies and organisations. The increasingly complex internal and external landscape presents unique challenges for Boards. Several key steps can however significantly increase the cyber resilience of any company or organisation, irrespective of size. The article outlines five key steps…
August 20, 2020
Minimising the Risk of Virtual Meetings: 5 Practices Boards Should Avoid
Months into the COVID-19 lockdown, remote workers—and board members—have become more accustomed to virtual meetings. They’ve found a quiet place in the house, mastered the mute and camera buttons, and fully styled their background bookcases and “Zoom couture.” Yet as virtual work becomes a way of life, not all adaptive…
January 30, 2020
Voice Assistants in the Boardroom: The Pro’s and Con’s
Australians are going crazy for voice assistants – they are selling faster there than in the US, according to Voicebot.ai, and 5.7 million Aussies already have them. They are becoming popular in New Zealand too, reportedly, although there has been some scarcity…