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tZERO Crypto - Buy, Sell, Grow

Latest release: 2.0.10722 ( 24th October 2022 ) 🔍 Last analysed 1st October 2021 . Custodial: The provider holds the keys
3.4 ★★★★★
322 ratings
100 thousand
24th July 2019

Jump to verdict 

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.

If you find something we should include, you can create an issue or edit this analysis yourself and create a merge request for your changes.

The Analysis 

The description on Google Play lists its features:

An easy and secure way to instantly buy, manage, and sell Bitcoin, Ethereum, Dogecoin, Litecoin, Ravencoin and many more.

Also on the same page, a few paragraphs down:

We do not hold your crypto. When you purchase Bitcoin, Ethereum, Dogecoin, Litecoin, Ravencoin etc., it is sent from the point of purchase directly to your private wallet. Unlike many sites & exchanges, this means that no one will steal your crypto!

While at the interim, this may seem confusing, we dug around a bit more and found the explanation in tZERO Crypto app’s Terms and Conditions:

You also agree to take any steps necessary that we or the Custody Provider request to confirm such authority to such External Wallet. tZERO Crypto reserves the right to restrict, delay, or cancel any Deposit or Withdrawal if it perceives a risk of fraud orother illicit activity. When you initiate Withdrawal Transactions, tZERO Crypto will transmit the instructions to the Custody Provider who will conduct the transaction.

After some Googling, we found that tZERO has partnered with Prime Trust as its “Custody Provider”.

The app through technological means, acts as a middle man who “sends instructions” to another middle man, which is Prime Trust. We took a look at the custodial service of Prime Trust and saw this at the bottom of their ‘Prime Custody’ page.

We offer both wallets that require manual signing as well as wallets with programmatic signing. Our smart contracts have all undergone independent security that audits in addition to our routine IT examinations and penetration testing.

The rationale for this “passing around of custody” has to do more with the legal nature of cryptocurrencies as tZERO Group Inc. is a Delaware, USA based company while its cryptocurrency related company tZERO Crypto Inc., is registered in Utah. As such we determined this app to be custodial and therefore not verifiable.

(dg)

Verdict Explained

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:

Custodial!

Is the product self-custodial?

If the answer is "no", we mark it as "Custodial: The provider holds the keys".

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.
The product cannot be independently verified. If the provider puts your funds at risk on purpose or by accident, you will probably not know about the issue before people start losing money. If the provider is more criminally inclined he might have collected all the backups of all the wallets, ready to be emptied at the press of a button. The product might have a formidable track record but out of distress or change in management turns out to be evil from some point on, with nobody outside ever knowing before it is too late.