Representatives from 35 crypto firms convened in Chicago on Tuesday to discuss how to control the activities of the growing number of hackers and con artists, many of which continue to infest the space and ruin the reputation of the burgeoning industry. Ironically, the meeting took place the same day as Binance, the biggest crypto exchange, was hacked for some 7,000 BTC ($41 million).
Blacklist or Accreditation Scheme?
Those in attendance included DRW Holdings Inc.’s Cumberland crypto unit, Bitcoin evangelist Mike Novogratz’s Galaxy Digital Holdings, and Ripple, with the collective discussing the creation of a blacklist of counterparties known to engage in criminal activities or renege on deals. An alternative put forward was the establishment of an accreditation scheme known as the Crypto OTC Roundtable Asia, or CORA, with crypto businesses held in good standing being approved. Co-organizer Darius Sit, managing partner at trading firm QCP Capital, said of the discussions:
A community-wide effort to improve compliance standards would prevent liabilities that might stem from trading with bad actors or dealers that trade with bad actors. A self-governance initiative like this is also something that regulators are keen to see.
Easier Said Than Done
Other ideas put forward included a common standard for verification of customer identities and source of funds, or having CORA disseminate information on counterparties that have defaulted on other trades. No firm decisions were made during the exploratory meeting, but the fallout from the Binance hack that was going on at the same time highlighted the need for such a system. However, the theory of a blacklist is one thing but putting it into practice might be harder, according to another attendee Vishal Shah, senior trader at digital asset hedge fund Cipher Technologies Management LP:
Such occurrences are unique and frequent, making a standardized implementation of a blacklist tough. There is also the question of legality, and on the cover, it looks more sinister than its intent.
Despite the lack of a concrete plan, it seems that there is a desire to keep the idea afloat and to work on a solution, according to Yoshi Nakamura, a senior member of Galaxy Digital’s trading team, who said that it was “important to create the bridge and it’s important to keep working on it.”