Business Continuity: The "Dead Man's Switch" for Private Keys
The Executive Verdict
Introduction: The $190 Million Lesson
When QuadrigaCX CEO died, $190M was lost because he held the only keys. In TradFi, banks unlock funds. In Web3, math ignores courts. You need a "Lazarus Protocol" to resurrect access.
1. The "Bus Factor" Audit
Bus Factor = Minimum people hit by a bus for operations to stall. If Factor = 1 (CEO), you are uninvestable. Goal: Factor of 3 for Treasury Access.
2. Strategy A: The "Social Recovery" Multi-Sig (The Standard)
Scenario: CEO dies in 2-of-3 setup. Mechanism: CFO + Exterior Legal Counsel (Recovery Key) sign a transaction to swap 0xCEO for 0xNewCEO. Human judgment prevents accidental triggers.
3. Strategy B: The "Dead Man's Switch" (The Automation)
Smart Contract Logic: 1. Heartbeat (Ping every 90 days). 2. Trigger (Safety Check). 3. Execution (Transfer Admin rights to Backup Address). Risks: Coma, Kidnap. Best for personal holdings, not large teams.
A Timeline Diagram. Day 0: Ping. Day 90: Silence. Day 91: Warning. Day 97: Transfer Executed.
4. Strategy C: Institutional Custody (The Legal Route)
Event: CEO dies. Paperwork: Board Resolution + Death Certificate. Verification: Coinbase Prime legal team. Handover: Assign new credentials to successor. Pros: Easy. Cons: Time-consuming.
5. The "Shamir's Secret" Physical Backup
For Seed Phrases: Split seed into 5 Shards using Shamir's Secret Sharing (SSS). Rule: Any 3 Shards reveal key. Distribute to Bank Vaults, HQ Safe, Attorney. Never give one person enough shards.
6. The Legal "Sidecar": The Token Will
Operating Agreement must state: "Digital Assets are property of the Company, not the Individual." Technical switch is useless if illegal. Do NOT put seed phrases in a public Will.
7. The "Fire Drill": Testing Mortality
Test it annually. CEO goes dark for 1 week. Team attempts Recovery Protocol. If you fail the drill, fix the process.
Conclusion: Memento Mori
In crypto, you are your own Central Bank. If business continuity relies on you being alive, you own a fragile job. Build the boat so it sails without you.
F.A.Q // Logical Clarification
Can I use a password manager (1Password)?
"Use "Emergency Access," but storing seeds in cloud is High Risk. Better to use on-chain recovery."
What is "Sarcophagus DAO"?
"Decentralized Dead Man's Switch on Arweave. Fascinating, but Enterprise prefers Multi-Sig Recovery."
What if the Lawyer steals the backup key?
"Backup Key should be 1-of-3. They still need collusion to steal funds."
How does this impact Estate Taxes?
"Corporate assets don't move (LLC ownership transfers), making it cleaner for taxes."
Module ActionsCW-MA-2026
Institutional Context
"This module has been cross-referenced with Operations & Security / Succession Planning standards for maximum operational reliability."