Toronto-based Newton, a no-fee mobile cryptocurrency platform, has partnered with fellow Toronto company Balance, a cryptocurrency custodian.
In a blog post, CEO Dustin Walper described the move as preventing the next QuadrigaCX scandal, the crypto exchange that famously lost access to $250 million CAD in customer money after the death of CEO Gerald Cotten. Cotten was reportedly the only person who could access the QuadrigaCX funds, and the company also lacked records, making the case more challenging for auditors.
“We know that some customers are concerned that what happened at Quadriga last year could happen again, and we want them to rest assured that it can’t happen at Newton.”
“With no controls and no oversight, [Cotten] was able to hide his criminal negligence for over a year—and it could have continued for a long time,” Walper wrote.
In traditional industries like gold or oil, third-party custodians hold assets on behalf of companies to prevent unethical behaviour and theft. In a similar way, Balance does this for cryptocuurrency, acting as a third party wallet provider and custodian for Newton’s assets. All movement of funds in and out of cold and hot wallets will have an auditable set of records, and customer assets will soon be insurable.
“Ensuring the security of our customers’ assets is a top priority,” said Walper. “As the Canadian cryptocurrency market expands and matures, Newton is leading the way in implementing the financial controls that will safeguard the security and transparency of all customer funds. We know that some customers are concerned that what happened at Quadriga last year could happen again, and we want them to rest assured that it can’t happen at Newton.”
Newton launched in April 2018, allowing customers to link to bank accounts and trade in Bitcoin, Ethereum, and Litecoin. In August 2018, Newton received a conditional commitment of $15 million from DV Chain a liquidity provider in the cryptocurrency space. Balance, which is focused on the Canadian market, was recently part of the Techstars Toronto accelerator. It received an undisclosed investment from Bicameral Ventures in July 2019.
“We’re extremely pleased to be working closely with Newton,” commented George Bordianu, co-founder and CEO of Balance. “Balance is committed to promoting the need for strong financial controls and regulatory supervision for the local digital asset ecosystem, and Newton has demonstrated a commitment to this same vision.”