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Canadian cryptocurrency exchange reportedly loses $190 million of customers’ money after founder dies

Canadian cryptocurrency exchange reportedly loses $190 million of customers’ money after founder dies

QuadrigaCX, a Canadian cryptocurrency exchange company, says it can not pay most of the $ 190 million in customer investments after its founder Gerald Cotten, 30, and the only person who knew the passwords of the ” cold wallet “(storage for storing virtual currency that does not connect to the Internet), died unexpectedly in India in December 2018, Coindesk reported .

In an affidavit before the Supreme Court of Nova Scotia, widow Jennifer Robertson said that QuadrigaCX owes its clients about $ 190 million in both cryptocurrency and trust money. QuadrigaCX has requested protection from the creditor because it says it can not access the funds stored in the wallet.

We speak of approximately 26,500 bitcoins (92.3 million dollars), 11,000 bitcoins in cash (1.3 million dollars), 11,000 bitcoin in cash SV (707,000 dollars), 35,000 bitcoin gold (352,000 dollars), almost 200,000 litecoin ($ 6.5 million dollars). dollars) and approximately 430,000 ether ($ 46 million dollars), for a total of 147 million dollars, according to the affidavit.

In the affidavit, Robertson explained that “only a minimum amount of coins” were stored in the usual purses, the rest in the cold wallet, but details were not provided.

Canadian cryptocurrency exchange reportedly loses $190 million of customers’ money after founder dies

Robertson also said that Cotten was ” solely responsible for the management of funds and currencies ” and that no other team member could access the stored funds. QuadrigaCX announced the death of Cotten in mid-January, saying he had died ” due to complications with Crohn’s disease on December 9, 2018 while traveling to India, where he was opening an orphanage to provide a safe home and shelter for children in need. “

While Robertson has Cotten’s laptop in his possession, he wrote CoinDesk, she says she does not know the password and that a technical expert recruited by the company has not been able to skip encryption. The woman also says that Cotten did not leave business records.

Canadian cryptocurrency exchange reportedly loses $190 million of customers’ money after founder dies

Other reports have suggested that it is possible that some of the funds in question were moved after the case was published, and although the evidence was not final, this and the strange circumstances of Cotten’s death led to accusations that his death was false or the pretext for some kind of scam, according to CNN . However, Robertson included a death certificate, CoinDesk wrote.

According to the CBC, the government confirmed that a Canadian had died in India, but could not offer more details due to privacy laws.

As the chain pointed out, Canada’s Imperial Bank of Commerce froze $ 26 million in QuadrigaCX assets in January 2018 ” after detecting irregularities in the processing of payments “, and a document from the Ontario Superior Court of Justice in 2018 concluded that ” 67 million dollars in transactions ended up being improperly transferred to the personal account of Costodian Inc, the payment processor.” The problem was solved, although according to CoinDesk, QuadrigaCX says that both the legal struggle and the current problems with payment processors have “seriously compromised” their ability to access the tens of millions of dollars in holdings held by processors.

An article in the Wall Street Journal of 2017 pointed out that unlike stock exchanges, which only facilitate transactions, cryptographic exchanges are especially vulnerable because they store cryptocurrencies for their clients. However, the threats associated with this practice are usually hackers and other cybercriminals, rather than lost passwords.

Robertson had written that the exchange ” urgently requires a suspension of procedures that would allow Quadriga and its contractors additional time to find available cryptocurrency stores and also to negotiate bank drafts available for Quadriga,” CoinDesk wrote.

” This is a hard lesson learned ,” Calgary client Elvis Cavalic told CBC, adding that he had not been able to withdraw $ 15,000 in shares in October 2018.

“I will probably avoid cryptocurrency in the future,” Cavalic said. ” They have left us completely in the dark. I’m preparing for the worst, “settled the man. [ CoinDesk / CBC via the Verge ]

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