# kaal:claim:3936876-017

**Claim.** Custodial exchanges are largely unprepared for breach: only 53 percent of small custodial exchanges and 78 percent of large custodial exchanges have a written policy setting out what happens to customer funds if a security breach causes loss.

**Type.** empirical  **Support.** evidenced

**Holds when.**

- custodial cryptocurrency exchanges surveyed in the 2017 benchmarking study

**Source quote.**

> Just 53% of small custodial exchanges and 78% of large custodial exchanges have a written policy outlining what happens to customer funds in the event of a security breach resulting in the loss of customer funds.

**From.** Wulf A. Kaal, Hayley Howe, *Custody of Digital Assets* (2021), II.2.a Hot Storage, page 17

**Cite as.** Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876

**Verify.** sha256 of source PDF `9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Howe%20-%202021%20-%20Custody%20of%20Digital%20Assets.pdf

**Failure mode.** no written loss allocation policy  (family: custody-and-key-loss)

**Topics.** defi, governance-design

**Keywords.** exchanges, breach-policy, customer-funds, governance-gap

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.