Argentine entrepreneur Wences Casares, CEO of startup Xapo, has built a network of underground vaults on five continents for the purpose of storing Bitcoin, according to Moneyweb.
Xapo’s security method is to bury encrypted computer servers in a mountainside and layer on electronic and physical safeguards. It is said the process to retrieve owners’ Bitcoins can take about two days. Xapo first verifies the client’s identity before manually signing the transaction with private keys from multiple vault locations. Verification from three vaults is required before funds can be issued.
Two Xapo clients maintain the bunkers house USD 10 billion of Bitcoin, and another person close to the venture says that this approximation is accurate. If this is the case, then this is a massive cache as it amounts to about 7% of the global bitcoin supply. This would mean that Xapo held more deposits than 98% of all US banks.
In the US, the company is overseen by the Financial Services Standards Association which assures members comply with current anti-money laundering regulations. Xapo is also registered with the US Treasury Department’s Financial Crimes Enforcement Network and is licensed in several US states.
“Everyone who isn’t keeping keys themselves is keeping them with Xapo,” said Ryan Radloff of CoinShares, which has more than USD 500 million of Bitcoin stored at Xapo. “You couldn’t pay me to keep it with a bank.”
Such seemingly over excessive storage of digital currency is not quite so unusual given the rise of crypto hacking in past years. Hackers are able to set traps on computers in order to access cold storage devices as soon as they’re online. Home invasions have been recorded, forcing major Bitcoin holders to hide their identities and fortify their private residences.
Caseres, the man behind the vaults, who has declined to comment on the story, rarely makes public statements or attends media interview. His advisers are clearly chosen from the higher echelons of the financial world, including former US Treasury Secretary Larry Summers, ex-Citigroup Chief Executive Officer John Reed, and Visa International founder Dee Hock.
Once First Block Capital, Canada’s first fully registered crypto firm, had toured one of the Swiss-based vaults, they were convinced that Xapo would fulfill their needs. Such is the level of the security that the vaults’ fingerprint scanners are equipped with a pulse reader to prevent amputated hands from being used. Sean Clark, First Blocks founder commented:
“Every part of their DNA is geared to security… Whenever we make big transfers they FaceTime us, we have duress words, if it’s big enough they’ll fly out to see us.”
The company only safeguards Bitcoin because of Casares’s belief that it alone will succeed, turning away those wanting to store other digital currencies. Xapo has some major backers, including LinkedIn Corp co-founder Reid Hoffman and former Wall Street trader Mike Novogratz.
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