I guess you can take it with you; you just have no use for it.
Canadian cryptocurrency exchange QuadrigaCX has found themselves in a bit of a pickle. They can’t repay over $190 million in client holdings due to the fact that their founder died abroad with the only password to those holdings.
QuadrigaCX founder Gerald Cotten had the only password to the firm’s “cold storage” – that is, the more secure storage where the bulk of the firm’s cryptocurrency is stored. Without access to that storage, the firm only has the amount in the “hot wallet”; the storage place that handles day to day transactions, carrying significantly less cryptocurrency to deter theft.
QuadrigaCX announced Cotten’s death in January:
In an affidavit, Cotten’s widow, Jennifer Robinson stated that the firm owes it clients $190 million in both cryptocurrency and fiat money. QuadrigaCX has filed for creditor protection due to these circumstances. Per CoinDesk:
As of Jan. 31, 2019, there were roughly 115,000 users with balances signed up on the exchange, with $70 million CAD in fiat and $180 million CAD in crypto owed overall, according to the filing.
The exchange holds roughly 26,500 bitcoin ($92.3 million USD), 11,000 bitcoin cash ($1.3 million), 11,000 bitcoin cash SV ($707,000), 35,000 bitcoin gold ($352,000), nearly 200,000 litecoin ($6.5 million) and about 430,000 ether ($46 million), totaling $147 million, according to the affidavit.
It was not clear what portion of the exchange’s crypto holding were kept in cold storage, versus its hot wallet. In the affidavit, Robertson explained that “only a minimal amount of coins” were stored in the hot wallet, but specifics were not provided.
According to Robertson:
The normal procedure was that [QuadrigaCX founder and CEO Gerald Cotten] would move the majority of the coins to cold storage as a way to protect the coins from hacking or other virtual theft.
Jennifer Robertson
She went on to say that Cotten had “sole responsibility for handling the coins and funds” and that other QuadrigaCX members have had no luck in accessing the cold storage funds. While Robertson has Cotten’s laptop, neither she nor a technician have been able to bypass its encryption. And, naturally, he left behind no business records.
While there were some suspicions aroused after Cotten’s untimely death, Robertson did include a death certificate in the filing.
This was not the first blow QuadrigaCX had suffered, according to CBC. In January 2018, the CIBC froze $26 million of the company’s assets after noticing some irregularities in their payment processing. A 2018 Ontario Superior Court of Justice document states that around $67 million in transactions were transferred improperly by the exchange into the personal account of Costodian Inc, the payment processor. Quadriga alleged that the bank was wrong, and targeted them out of a distrust of virtual currency.
Source: Gizmodo
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