Cryptographic Compliance

How Goldman Sachs could use Treza's Enclave attestation to prove their risk models are unmanipulated

The $10 Million Problem

In 2023, major banks paid over $3 billion in fines for risk model violations. The core issue? Regulators can't verify that banks actually used their approved algorithms.

When Goldman Sachs submits their daily Value-at-Risk (VaR) report claiming "$2.1B risk exposure calculated using approved model GS-VaR-v2.1," how can the Federal Reserve prove they didn't secretly modify the algorithm to hide losses?

Traditional answer: They can't. Until now.

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Enter Cryptographic Attestation

Treza's Enclave platform provides cryptographic proof of exactly what code executed, when, and where. No more "trust us" – now it's "verify us."

How It Works: The PCR Verification Process

Platform Configuration Registers (PCRs) are cryptographic hashes that act like "digital fingerprints" for your code. Think of them as tamper-proof seals:

• PCR0: Hash of the enclave environment (proves secure execution)

• PCR2: Hash of your exact algorithm code (proves no modifications)

Here's the magic: These hashes are generated by hardware and cannot be faked.

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Real-World Scenario: Goldman Sachs Risk Reporting

Step 1: Algorithm Certification

{
  "algorithmName": "GS-VaR-Model-v2.1",
  "regulatoryApproval": "Fed-2024-Risk-Model-456",
  "approvedPCRs": {
    "pcr0": "1ea2ee9e5d62e8621f2d0600247e96bb...",
    "pcr2": "fea91a08aa929ea7e13e7cca7ca6b429..."
  }
}

The Federal Reserve pre-approves Goldman's risk model and records the exact PCR fingerprints.

Step 2: Daily Risk Calculation

Goldman runs their VaR calculation in a Treza Enclave:

// Goldman's automated system
async function calculateDailyVaR() {
  // Verify enclave integrity before processing
  const currentPCRs = await getTrezaPCRs("enc_gs_var_prod");
  
  if (currentPCRs.pcr2 !== "fea91a08aa929ea7e13e7cca7ca6b429...") {
    alert("SECURITY BREACH: Algorithm modified!");
    return;
  }
  
  // Process sensitive portfolio data
  const varResult = await processRiskCalculation(portfolioData);
  
  return {
    var95: "$2.1B",
    attestation: currentPCRs // Cryptographic proof
  };
}

Step 3: Regulatory Submission with Proof

{
  "reportDate": "2024-08-27",
  "bankId": "GOLDMAN_SACHS",
  "var95": "$2.1B",
  
  "cryptographicProof": {
    "claimedAlgorithm": "GS-VaR-v2.1",
    "actualPCR2": "fea91a08aa929ea7e13e7cca7ca6b429...",
    "attestationSignature": "enclave_signature...",
    "executionTime": "2024-08-27T09:00:00Z"
  }
}

Step 4: Instant Regulatory Verification

# Federal Reserve's automated verification
APPROVED_PCR="fea91a08aa929ea7e13e7cca7ca6b429..."
ACTUAL_PCR=$(curl -s "https://api.treza.com/enclaves/enc_gs_var_prod/pcrs" | jq -r '.pcrs.pcr2')

if [ "$APPROVED_PCR" = "$ACTUAL_PCR" ]; then
  echo "✅ VERIFIED: Goldman used exact approved algorithm"
else
  echo "❌ VIOLATION: $10M fine triggered automatically"
fi

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The Business Impact

For Financial Institutions:

• Regulatory Confidence: Prove compliance with cryptographic certainty

• Audit Efficiency: Reduce audit time from months to minutes

• Risk Reduction: Eliminate "he said, she said" disputes with regulators

• Competitive Advantage: Faster model approvals due to verifiable integrity

For Regulators:

• Real-time Monitoring: Verify compliance 24/7, not just during audits

• Fraud Prevention: Detect algorithm tampering instantly

• Resource Efficiency: Automated verification reduces manual oversight

• Market Stability: Increased confidence in reported risk metrics

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Beyond Risk Models: Expanding Use Cases

Algorithmic Trading

// Prove your trading algorithm hasn't been modified
const tradingProof = {
  strategy: "Goldman-Momentum-v3.2",
  pcr2: "8bc4d19f7e2a5b3c9d8e1f4a6b7c2d9e...",
  performance: "+12.3% YTD",
  proof: "Cryptographically verified execution"
};

Credit Scoring

// Prove fair lending algorithm compliance
const creditProof = {
  model: "Fair-Credit-Score-v2.1", 
  pcr2: "2d9e1f4a6b7c8bc4d19f7e2a5b3c9d8e...",
  decision: "APPROVED",
  fairnessVerified: true
};

Regulatory Reporting

// Automated compliance for Basel III, CCAR, Dodd-Frank
const complianceProof = {
  regulation: "Basel-III-Capital-Adequacy",
  calculationPCR: "5b3c9d8e1f4a6b7c2d9e8bc4d19f7e2a...",
  result: "Tier 1 Capital: 12.3%",
  regulatorVerified: true
};

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Technical Architecture: How We Built It

Our platform leverages Enclaves – hardware-secured compute environments that generate unforgeable cryptographic attestations:

Key Components:

1. Secure Deployment: Your algorithms run in hardware-isolated enclaves

2. PCR Extraction: Real-time cryptographic fingerprinting

3. Attestation API: RESTful endpoints for verification

4. Audit Trail: Immutable record of all executions

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Getting Started: Implementation in 3 Steps

Step 1: Deploy Your Algorithm

POST /api/enclaves
{
  "name": "Your-Risk-Model-v1.0",
  "dockerImage": "your-company/risk-model:v1.0",
  "instanceType": "m6i.xlarge"
}

Step 2: Record Baseline PCRs

const baselinePCRs = await getTrezaPCRs("your_enclave_id");
// Store these as your "approved" fingerprints

Step 3: Verify Before Each Execution

const currentPCRs = await getTrezaPCRs("your_enclave_id");
if (currentPCRs.pcr2 === baselinePCRs.pcr2) {
  // Safe to process sensitive data
  const result = await processData(sensitiveData);
}

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ROI Calculator: What's This Worth?

Cost of Non-Compliance:

• Average regulatory fine: $50M - $500M

• Audit costs: $2M - $10M annually

• Reputation damage: Immeasurable

Payback Scenarios:

• Avoid one fine: 10x ROI immediately

• Reduce audit time by 80%: $1.6M - $8M savings annually

• Faster model approvals: Competitive advantage worth millions

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The Future of Financial Compliance

We're entering an era where "trust but verify" becomes "don't trust, cryptographically verify."

Financial institutions that adopt verifiable computation today will have significant advantages:

• Regulatory fast-track: Faster approvals for verified models

• Lower capital requirements: Regulators trust verified calculations

• Market confidence: Clients trust cryptographically proven results

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Ready to Eliminate Regulatory Risk?

Contact our team to see how Treza's PCR attestation can transform your compliance workflow:

• Demo: See real PCR verification in action

• POC: 30-day proof of concept with your algorithms

• Integration: Full deployment support

Schedule a demo: [email protected]

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