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How SwissBorg prioritises safety in volatile markets

13 June 2022

SwissBorg prioritises safety
Alexander Fazel Chief Partnership Officer

Alexander Fazel

Chief Partnership Officer

As you know, we are going through one of the toughest times in the current market cycle due to macroeconomic and geopolitical issues. Just some of these include the war in Ukraine, energy crisis, double-digit inflation, interest-rate hikes, the fall of UST Terra and more.

In times like this, it’s natural to experience some fear, uncertainty and doubt. As investors, we experience this too! This is why we would like to give our valued community an overview of the different risks facing organisations operating within the cryptosphere, and how SwissBorg is mitigating each of these risks to keep you and your assets safe.

Bankruptcy and default risks

As a result of the critical macroeconomic and geopolitical risks facing financial markets, numerous actors, including major crypto companies, could potentially become insolvent and file for bankruptcy.

At SwissBorg, we are very fortunate to have strong risk management measures and prudent budgeting practices. At the end of summer, 2021, our risk management team committed to holding two-thirds of our assets in fiat and stablecoins, thereby offsetting the risks of volatility in other crypto assets. We hold the remaining third of our treasury in crypto, with the majority in top-10 tokens with strong fundamentals (BTC, ETH and BNB). 

While the SwissBorg team is a fan of many alt coins, as a business we have the responsibility to not only protect our users’ assets, but also to maintain our services, and keeping our treasury in lower-risk cryptos ensures SwissBorg will be able to do this. For this reason, SwissBorg never took on any exposure to UST.

In addition to this treasury, we, of course, have our CHSB tokens. These tokens are predominantly used to fund CHSB Yield 2.0 and to reward our team, but they remain available as a rainy-day fund should they be needed.

While the value of SwissBorg’s treasury has suffered in the current bear run, we have the assets to successfully weather the current storm. In fact and at the current rates, we can survive another 2+ years, and we have additional contingency plans in the unlikely event that the bear market is prolonged.

Custodial vs. non-custodial risks

What  about your funds? A few major CeFi companies have stressed that funds could be lost in case of bankruptcy, leading to tremendous panic and a surge in withdrawals among CeFi providers. 

DeFi, or Web 3.0, wallets are being used as an alternative solution, however, these wallets come with their own risks, including hacks and phishing, with no way to recover assets. In addition, the challenge of private key management can lead to assets being permanently lost, especially in cases where accidents lead to the wallet holder being unable to access that wallet.

At SwissBorg we offer the best of both CeFi and DeFi. 

  • On top of being financially healthy, our Virtual Currency Licence requires us to keep 100% of user funds fully segregated from our corporate funds at all time. This means that, in the highly unlikely case of a bankruptcy, hack or scam, your funds will be fully redeemable.
  • SwissBorg uses MPC keyless technology and advanced cryptography for the security of both your assets and personal data with one of the largest custody providers in the world: Fireblocks.
  • The SwissBorg app passed a penetration test, conducted by trusted whitehat hackers with flying colours last year.

According to our research, these best practices from CeFi and DeFi result in SwissBorg being the safest crypto app in the world for storing, trading and yielding your assets. 

Looking to the future

Other than safety, many of you dear community members are going through tough times and may have lost a significant amount of your wealth. In times like this, it is critical to understand that this is not the first nor the last time we will see such bear markets - corrections are simply a normal part of market cycles.

Not only will the markets eventually recover and reach new all-time highs but neither Bitcoin, major blockchains, nor SwissBorg will disappear. And while the storm lasts, we would like to reassure you, once again, that your funds are safe and can take advantage of what could be considered buying opportunities.

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