Klever Exchangelatest release: 1.0.3 ( 1st October 2021 ) last analysed 5th October 2021 Custodial: The provider holds the keys
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Do your own research!
Try out searching for "lost bitcoins", "stole my money" or "scammers" together with the wallet's name, even if you think the wallet is generally trustworthy. For all the bigger wallets you will find accusations. Make sure you understand why they were made and if you are comfortable with the provider's reaction.
The Analysis ¶
(Analysis from Android review)
The Klever Exchange is distinct from.
From their Google Play description
Klever Exchange will be a centralized crypto-to-crypto exchange (CEX) with a clear emphasis on iron-clad security…
It is apparent that the Klever Exchange component to the Klever ‘ecosystem’ is a custodial service. Proof of this could be found in page 12 of the Klever Whitepaper. This segment details the security arrangements for how the Klever apps interact with each other.
The Klever Exchange will offer custody to user funds in multiple Klever Security Modules (KSMs)
These KSMs will autonomously manage the funds between themselves based on the balance that they are storing. The security architecture of the KSMs will follow strong security patterns to encapsulate the access to them, and enable them to only communicate with our services. The KSMs instances are using the already consolidated Klever Core used in the Klever Wallet, all based on Klever OS
It adds on page 23, of the same document:
With the launch of Klever Exchange, the Klever ecosystem will give our users the option of holding their crypto in self-custody through the Klever app, as well as in the custody of Klever Exchange in order to trade at the fastest crypto exchange on the market, supporting over 3M transactions per second.
The Klever Exchange app
We downloaded the Klever Exchange app and found that it has a BTC wallet which can send and receive bitcoin. However, unlike the Klever app, it does not provide as 12-word seed phrase and no indications of how to backup funds.
Klever has engaged with a partnership with Jumio, an “Identity Verification Solutions” Provider.
According to Section 3 of its Terms and Conditions, Klever also has the capability to freeze not just accounts, but also transactions:
Additionally in the case of allegations that funds kept by you in your KIever Exchange account are stolen or otherwise are not lawfully possessed by you, we may freeze your account or assets until evidence of the settle of any dispute has been presented. In case of termination all amounts payable by you to Klever Exchange will immediately become due; all open orders and pending transactions will be canceled;
Our verdict for the Klever Exchange is custodial and therefore not verifiable
As the provider of this product holds the keys, verifiability of the product is not relevant to the security of the funds!
As part of our Methodology, we ask:Is the product self-custodial? If not, we tag it Custodial!
A custodial service is a service where the funds are held by a third party like the provider. The custodial service can at any point steal all the funds of all the users at their discretion. Our investigations stop there.
Some services might claim their setup is super secure, that they don’t actually have access to the funds, or that the access is shared between multiple parties. For our evaluation of it being a wallet, these details are irrelevant. They might be a trustworthy Bitcoin bank and they might be a better fit for certain users than being your own bank but our investigation still stops there as we are only interested in wallets.
Products that claim to be non-custodial but feature custodial accounts without very clearly marking those as custodial are also considered “custodial” as a whole to avoid misguiding users that follow our assessment.
This verdict means that the provider might or might not publish source code and maybe it is even possible to reproduce the build from the source code but as it is custodial, the provider already has control over the funds, so it is not a wallet where you would be in exclusive control of your funds.
We have to acknowledge that a huge majority of Bitcoiners are currently using custodial Bitcoin banks. If you do, please:
- Do your own research if the provider is trust-worthy!
- Check if you know at least enough about them so you can sue them when you have to!
- Check if the provider is under a jurisdiction that will allow them to release your funds when you need them?
- Check if the provider is taking security measures proportional to the amount of funds secured? If they have a million users and don’t use cold storage, that hot wallet is a million times more valuable for hackers to attack. A million times more effort will be taken by hackers to infiltrate their security systems.
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