Zaif Exchangelatest release: 1.1.7 ( 25th August 2021 ) last analysed 21st October 2021 Custodial: The provider holds the keys
Help spread awareness for build reproducibility
Please help us spread the word discussing the risks of centralized custodians with Zaif Exchange via their Twitter!
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)
This looks like a centralized and Japanese government regulated cryptocurrency exchange.
Zaif is a virtual currency exchange company registered by the Financial Services Agency (registration number Kinki Local Finance Bureau Director No. 00001)
Can it withdraw and deposit Bitcoin?
Tutorial on how to deposit Bitcoin using the service
Tutorial on how to withdraw Bitcoin using the service
We were not able to register with the app as they have numerous questions documentary requirements which include:
- Yearly Income
- Status of Financial Assets
- Do you possess debt?
- Is your fund surplus or is it reserved for crypto asset management?
- Motive and background of becoming a user
- Citizen of the US
- Person Exposed to Politics
- Antisocial Forces
We contacted Zaif’s twitter to verify whether they stored the private keys on their servers or if it’s with the user.
All indications point to a government regulated and centralized cryptocurrency exchange. We were not able to find documentation concerning the private keys for the user. At this juncture, we can conclude that this service is custodial and the app is 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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