Part of the CustodyStress archive of observed Bitcoin custody incidents
CS-01107
Sanctions lockout — 3-of-5 multisig (2023)
SurvivesCase description
A US-based investment fund that had established a 3-of-5 multisignature Bitcoin custody arrangement in 2021 encountered signing complications in 2023 when two key holders were located in a country under sanctions following a geopolitical event. OFAC guidance indicated that facilitating a multisig transaction that required the signature of a sanctioned-country resident could itself constitute a sanctions violation. The remaining three key holders—who could technically reach quorum—sought legal guidance before proceeding. The process of obtaining a legal opinion took three months.
Custody context
| Stress condition | Multisig quorum failure |
| Custody system | Institutional custody |
| Outcome | Survives |
| Documentation | Unknown |
| Year observed | 2023 |
| Country | United States |
Structural dependencies observed
Outcome interpretation
Access remained possible under the reported conditions.
Source
Publicly Reported
Evidence type
News article
Evidence link
Related cases involving multisig quorum failure
77 cases involve multisig quorum failure
10 cases involve institutional custody
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This archive documents observed custody survivability failures. It does not attempt to document all Bitcoin losses or security incidents.
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Framework references
Where Bitcoin Custody Intersects Legal and Fiduciary Authority
Where custody creates gaps in estate planning, fiduciary duty, and professional responsibility.
Professional Scope Boundary Matrix
What each professional or product covers, what they do not, and where gaps form between them.
The Independent Assessment Layer in Bitcoin Custody
How independent diagnostic layers emerge when multiple parties depend on shared infrastructure.
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