Hundreds of millions gone missing affecting 115,000 clients
The country’s most widely used crytocurrency trading platform, QuadrigaCX, recently filed for creditor protection as it had lost access to nearly $200 million in Bitcoin and other cryptocurrencies. Altogether including Canadian cash, the company owes $250 million in assets to its 115,000 customers. Jeebus! 😮
According to statements from his family last month, Quadriga’s 30 year old CEO, Gerry Cotton allegedly died suddenly in December due to complications of Crohn’s disease while traveling in India. Cotten’s wife, Jennifer Robertson, claims her husband was the only person with access to the company’s cold wallets. Cold wallets are similar to savings accounts, used for storing and accumulating currency. On the other hand hot wallets are like checking accounts, used for frequent transactions. People who hold cryptocurrencies often have both. Hot wallets are connected to the internet and are used to facilitate transactions. Quadriga has some of its clients money in hot wallets for liquidity purposes, like when someone wants to withdraw funds. But it keeps most of the assets offline in cold storage, to avoid hacking.
Cotten basically ran the exchange on his encrypted laptop. He was the sole person responsible for transactions between the company’s hot and cold wallets. And apparently only he knew the passwords and recovery keys to access the cold wallets.
Court documents revealed the company had been recently facing liquidity problems. The website went offline at the end of January and clients can no longer log in to their accounts. Currently the only content on the site quadrigacx.com is a letter from the company.
Unfortunately any attempts at trying to access Cotten’s laptop to retrieve the keys to the wallets haven’t been successful. But in the latest twist of this unusual story, last week Ernst and Young (EY), the monitor of the QuadrigaCX case, stated that an additional sum of Bitcoin had disappeared from the company. This is because QuadrigaCX “inadvertently” transferred $468,675 worth of Bitcoin to cold wallets controlled by CEO Gerald Cotten, who is supposed to be dead.