CCA Cryptocurrency Exchange & Custody Auditing

Question 1

When auditing a cryptocurrency exchange, which control is most critical for verifying that customer assets are properly segregated from exchange operating funds?

Accepted Answer

Proof-of-reserves attestation

Answer

Multi-signature wallet policy review

Answer

KYC documentation review

Answer

Trading volume reconciliation

Question 2

A custodian claims to use 'cold storage' for 95% of client assets. Which audit procedure best verifies this claim?

Accepted Answer

Review internet connectivity logs for cold wallet addresses

Answer

Inspect network firewall configurations

Answer

Confirm cold wallet address balances against customer ledger totals

Answer

Review employee access badges to the server room

Question 3

Which risk is most unique to auditing a cryptocurrency exchange compared to a traditional securities exchange?

Accepted Answer

Irreversibility of on-chain transactions

Answer

Front-running by market makers

Answer

Settlement failure risk

Answer

Counterparty credit risk

Question 4

An exchange uses an omnibus wallet for all customer deposits. What is the primary internal control concern an auditor should flag?

Accepted Answer

Inability to individually attribute on-chain balances to specific customers without off-chain records

Answer

Excessive transaction fees

Answer

Lack of multi-signature approvals

Answer

Slow deposit confirmation times

Question 5

During a cryptocurrency custody audit, the auditor discovers that private keys are split using Shamir's Secret Sharing among five key holders requiring three to reconstruct. What does this arrangement primarily address?

Accepted Answer

Single point of failure for key compromise

Answer

Regulatory reporting obligations

Answer

Customer withdrawal speed

Answer

On-chain transaction costs

Question 6

Which metric is most relevant when assessing liquidity risk during an exchange audit?

Accepted Answer

Ratio of hot wallet holdings to average daily withdrawal volume

Answer

Total trading volume over the past 30 days

Answer

Number of listed trading pairs

Answer

Server uptime percentage