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Following the death of the sole director and founder of QuadrigaCX, Gerry Cotten, the Canada-based crypto exchange has been thrown into several chaotic situations arising from their inability to access the firm’s funds which are reportedly stored in a cold wallet.
Running a crypto firm has never been a walk in the park. You are constantly working to meet the needs of customers while on the lookout for possible ways to protect your funds from cybercriminals and other fraudulent activities. This is why most exchanges would rather have their funds safely stored in a cold wallet – a digital wallet that is disconnected from the internet – than a hot wallet. While that is a feasible safety measure, it also exposes the firm to a plethora of troubles should the person with the password go missing even for a day or worse as in the case of
This is the current situation that the team members of QuadrigaCX have found themselves after the death of the founder who had been the only person with access to the encrypted laptop where the exchange’s funds (estimated to be $137 million) are safely stored.
According to Cotten’s widow, Jennifer Robertson, who filed a sworn affidavit last week, several attempts have been made to gain access into the encrypted laptop with no success yet. She stated in her filing that she had searched carefully but the password is not written down anywhere. In addition, she reportedly hired several experts to decrypt the laptop but all efforts have yielded no results until the time of compiling this article on Feb. 5.
To make matters worse, one of the hired experts who tried hacking into Cotten’s encrypted messaging system reported that the chances of reading those messages are slim as the messages would disappear from the system in the nearest future. As if that is not enough, the firm is currently drenched in at least three disputes with third-party partners, which caused another $53 million worth of assets to be inaccessible too.
Many customers have allegedly continued to make automatic transfers into the system. As at Thursday before access was restricted to the site, about 115,000 customers appear to be with outstanding balances. Consequently, the exchange had to make the website inaccessible to prevent customers from making any further transactions. Furthermore, they plan on filing for creditor protection as they continue to work towards gaining access into the company’s funds.