As a result, cryptocurrency-focused Fin Tech startups are operating without a semblance of continuity in the event of disaster, and a lack of robust regulation to ensure proper handling of data security is to blame.
SEE: Disaster recovery and business continuity plan (Tech Pro Research) Customers of Canada's largest cryptocurrency exchange Quadriga CX are experiencing the pains of this failure to plan following the apparent death of 30-year-old CEO Gerald Cotten.
Not having a password that holds the electronic money of thousands of people stored somewhere represents the height of irresponsibility.
Not having accounting methodologies that represent holdings is not only incautious, it's reckless." An effective business continuity plan lays out the instructions and procedures an organization must undergo when some kind of disaster occurs.
The death of a cryptocurrency exchange CEO serves as a cautionary tale for Fin Tech startups playing with huge sums of cash without the caution and oversight associated with traditional finance services.
Since the introduction of Bitcoin 10 years ago, an ecosystem of startups developed around the cryptocurrency market.For each function, two values are assigned: The above areas can cascade: Responders can stumble. During the 2002-2003 SARS outbreak, some organizations compartmentalized and rotated teams to match the incubation period of the disease.They also banned in-person contact during both business and non-business hours. Impact scenarios are identified and documented: Within the UK, BS 25999-07 and BS 25999-06 used for business continuity management across all organizations, industries and sectors.The implementation phase involves policy changes, material acquisitions, staffing and testing.The 2008 book Exercising for Excellence, published by The British Standards Institution identified three types of exercises that can be employed when testing business continuity plans.A Business impact analysis (BIA) differentiates critical (urgent) and non-critical (non-urgent) organization functions/activities.A function may be considered critical if dictated by law.Allegedly, Cotten died "due to complications with Crohn's disease on December 9, 2018 while traveling in India, where he was opening an orphanage," according to a post on the company's Facebook page.Cotten's death prompted a mass withdrawal from Quadriga CX, prompting liquidity issues, as most of the exchange's holdings were stored in cold wallets, for which only Cotten knew the password.Every organization should have such a plan in place to avoid losing money or halting operations, as was the case with Quadriga CX.A business continuity plan should include the following, according to Tech Pro Research: Business continuity planning is particularly important for relatively new Fin Tech startups, as cryptocurrency regulation and oversight is "still a Wild West," Bailey said.