If Crypto Custodian Fails, Clients May Not Get a Full Payout By Cointelegraph


Safety Check: If Crypto Custodian Fails, Clients May Not Get a Full Payout

A recent paper from academics at Leiden Law School suggests that if a crypto exchange or crypto custodian goes bankrupt, investors could well lose control over their stored coins. This happened in Japan’s Mt. Gox exchange collapse, and more recently with the failure of Italy’s BitGrail exchange. Thus, it could happen again.

Indeed, the paper implies that even users of United States-based exchange Coinbase could have problems reclaiming their crypto in the event of insolvency — because Coinbase doesn’t segregate blockchain addresses. So, the question still stands: “Is there a risk you could lose your ” if an exchange or custodian goes bankrupt?

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