- Australian Authorities Arrested 21-Year-Old for Crypto Fraud and Money Laundering
- Future Mainstream Spending Possibilities For Bitcoin
- Wells Fargo's New Crypto Initiative: The Stablecoin Wells Fargo Digital Cash
- Survey: People Are Intrigued But Confused about Crypto
- German Finance Minister: We Must Reject Stablecoins Such As Facebook Libra
Canadian crypto exchange QuadrigaCX has been granted an order for creditor protection in Nova Scotia Supreme court, following the recent death of the company’s co-founder and CEO. QuadrigaCX is a major cryptocurrency exchange and was Canada’s largest cryptocurrency exchange until 2019. QuadrigaCX’s CEO Gerald Cotton reportedly died suddenly from complications relating to Crohn’s disease in December 2018, at the age of 30. Cotton reportedly died on December 9 in India while opening an orphanage.
Cotton’s sudden death was both shocking and upsetting to those close to him but has also caused turmoil for the company. With Cotton’s death CAD$250 million ($190 million) in assets were left inaccessible. The company’s lawyer Maurice Chaisson told the Supreme Court that QuadrigaCX wants time to search for the digital assets and find a way to recover them. Roughly 115,00 users have been left unable to access their funds.
So why have users been left without access to their funds? The problem lies in how the cyrptocurrency was stored. It appears that Cotton was the only person with the recovery code to access the cold wallets. Cold wallet storage is offline storage, not connected to servers or infrastructure. Cotton didn’t share the codes with anyone, not even his wife who is the sole beneficiary of his estate. He has also not left any evidence of his passwords that would be needed to access the laptop where the cold wallets are stored.
This is obviously a huge flaw in the way the company was structured, and is against best practices, and has ultimately left users very frustrated. One user claims to have $70 million in funds. There are many concerns that the funds have been lost forever.
In total there are approximately 26,00 Bitcoin, 11,000 Bitcoin Cash, 200,000 Litecoin, and over 400,000 Ethereum as well other cryptos lost.
Adding to the confusion is a report released in Zerononcense Blog which alleges the following:
- There is no evidence of QuadrigaCX cold wallet reserves
- QuadrigaCX were allegedly using deposits from customers to pay other customers upon withdrawal requests
- QuadrigaCX doesn’t appear to have lost access to their Bitcoin holdings
- The Bitcoins reported by Jennifer Robertson, Cotton’s widow, appear to be substantially lower than reported.
- QuadrigaCX is not being truthful about being unable to access funds.
These allegations are obviously disconcerting and adding to the frustration and confusion of the affected users. Users on social media platform Reddit have raised red flags about Cotton’s official death certificate released by India, with some people even suggesting that he faked his own death. Conspirators have also cited that QuadrigaCX was facing financial issues and that death certificates can be bought in India.