Canadian crypto exchange QuadrigaCX can’t repay the $190 million to client holdings! After the death of the 30-year-old founder Gerald Cotten, the crypto holdings have been left locked in the cold storage, and he was the only one who knew the password.
Funds can’t be accessed following the founder’s death
According to a report by CoinDesk, the founder of Canadian crypto exchange QuadrigaCX unexpectedly died in India in December 2018. Therefore, the exchange now reveals that QuadrigaCX can’t repay the 190 million USD as Cotten was the only one who knew the password to their cold storage.
Also, the widow, Jennifer Robertson in a sworn affidavit with the Nova Scotia Supreme Court, stated that the exchange owes its customers roughly 190 million USD in both crypto and fiat money. The exchange filed for creditor protection last week after claiming that it cannot access user funds stored in the cold storage. At the moment, they can only access the smaller amount in the hot wallets used for transfers.
Furthermore, according to the report, “The exchange holds roughly 26,500 bitcoin (92.3 million USD), 11,000 bitcoin cash (1.3 million USD), 11,000 bitcoin cash SV (707,000 USD), 35,000 bitcoin gold (352,000 USD), nearly 200,000 litecoin (6.5 million USD) and about 430,000 ether (46 million USD). Which, when totaled, is 147 million USD, according to the affidavit.
However, it was not clear what portion of the exchange’s crypto holding was 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.”
Likewise, Robertson mentioned that Cotten was solely responsible for handling the funds and coins, with no other team member having access to the stored funds. QuadrigaCX announced the death of Cotten last month, revealing that he died “due to complications with Crohn’s disease on December 9, 2018, while traveling in India. There, he was opening an orphanage to provide a home and safe refuge for children in need.”
Robertson is in possession of Cotten’s laptop, but she doesn’t know the password. A technical expert has been hired by the firm but no success so far in trying to bypass the encryption. Also, she added that Cotten left no business record behind.
Some reports are suggesting that some of the funds have been moved after the case was made public, but, there is no evidence to support that theory. However, the strange circumstances of Cotten’s death have led to accusations that his death was faked. Or, that it was planned as an exit scam by other people with access to the holdings.
Robertson, however, included a death certificate in her filings. CBC in their report revealed that the government confirmed a Canadian had died in India. However, there were no extra details provided due to privacy laws.
In January last year, the Canadian Imperial Bank of Commerce froze 26 million USD worth of QuadrigaCX’s assets. This happened after the discovery of irregularities with the payment process. The Ontario Superior Court of Justice last year concluded that 67 million USD “worth of transactions ended up improperly transferred into the personal account of Costodian Inc., the payment processor.” Even though the issue was resolved, the exchange stated back then that the legal battle had severely affected their ability to access tens of millions of dollars’ worth of holdings held by the processors.
Robertson in her filing wrote that QuadrigaCX “urgently needs a stay of proceedings. This will allow Quadriga and its contractor’s additional time to find whatever stores of cryptocurrency may be available. And, it will also to negotiate the bank drafts available to the exchange.”
Cryptopia hack and Liqui closure makes for an interesting week in crypto space
New Zealand-based cryptocurrency exchange Cryptopia experienced multiple hacks last week. Blockchain firm Elementus published a blog post on January 29 that the hack on Cryptopia had continued after it reported the first attack.
According to the report, the exchange lost roughly 16 million USD worth of ETH and some ERC20 tokens. The data available on Ethereum’s network showed that funds began to be siphoned from the exchange’s two main wallets. In the second attack, the hackers stole 1,675 ETH (175,875 USD) from 17,000 Cryptopia wallets.
Another crypto exchange Liqui told its users in an official email last week that it would be shutting down its service. The email from the Liquid team noted that the team had no economic incentive to provide services following changes in policy. And, therefore, they are closing all accounts.
Users were given 30 days from the change in policy to withdraw their assets from the platform. And, have now been given another 30 days from the date the email was sent to withdraw their assets.