Chapter 8: Regulatory and Security Framework

As blockchain technology evolves, regulatory compliance and security are essential for mainstream adoption. LQDTY integrates compliance-driven mechanisms and advanced security protocols to ensure its ecosystem is safe, legally compliant, and resistant to fraudulent activities.

This chapter outlines the regulatory framework, security measures, and fraud prevention strategies embedded within LQDTY to create a trusted, enterprise-ready blockchain ecosystem.

8.1 Compliance with Global Standards

LQDTY is designed to be regulatory-friendly by incorporating compliance solutions that adhere to global financial and legal standards, enabling both retail users and institutional investors to operate within a secure and compliant ecosystem.

8.1.1 Anti-Money Laundering (AML) and Know-YourCustomer (KYC) Compliance

Zero-Knowledge Proof (ZKP)-Based KYC: Users can verify their identity without revealing personal data, ensuring privacy while complying with AML regulations.
Continuous Screening for PEPs and Sanctions: LQDTY enforces ongoing monitoring of Politically Exposed Persons (PEP) and sanctions, preventing illegal activities while maintaining privacy through ZKP validations.
Fraud Prevention Mechanisms: AML measures are embedded within the blockchain, ensuring that illicit activities such as money laundering, tax evasion, and terror financing are mitigated in compliance with global financial regulations

8.1.2 Investor Accreditation Compliance

LQDTY ensures that regulated investor categories can interact within the ecosystem while maintaining privacy and compliance.

Investor Categories Supported:
- Retail Investors
- 506(b) & 506(c) Investors (as defined by the U.S. SEC)
- Qualified Institutional Buyers (QIBs)
- Qualified Purchasers (QPs)

Accreditation Verification Using ZKPs: Investors can prove their status without
revealing sensitive financial information, ensuring full compliance while maintaining confidentiality.