One of Canada’s largest cryptocurrency exchanges, QuadrigaCX was in Nova Scotia Supreme Court today seeking creditor protection after the sudden death of founder, Gerald Cotten. The 30-year-old founder died due to complications from Crohn’s Disease in December, taking the only passwords to the cold wallets with him to the grave. Cotten was apparently the only person with the recovery code to access the currency held in secure cold wallets.
A laptop has been handed over to a court-appointed independent third party to monitor the company’s operations during bankruptcy procedures. This laptop could possibly provide access to the $190 million of customer funds held by QuadrigaCX. Lawyers for Quadriga said in court that they are considering a possible sale of the company to satisfy debts.
In an affidavit filed with the court in January, Cotten’s widow, Jennifer Robertson, said the laptop on which he “carried out the company’s business is encrypted and I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere”.
It is standard practice for some cryptocurrency exchanges to store funds in cold storage wallets, however, it is unusual for the keys to be held by only one person.
“Using a reputable custodian to hold the private keys outside the company is perhaps the best option to ensure these codes are not lost,” said Erik Wilgenhof Plante, CCO at BeQuant.
No Identifiable QuadringaCX Cold Wallet Reserves?
Many customers were suspicious because Cotten’s death in India was not reported until mid-January, inciting rumours that he wasn’t dead at all. Coindesk has since published a copy of the death certificate issued by the Government of Rajasthan’s Directorate of Economics and Statistics.
Findings by Zerononcense, add fuel to the fire. They say: “there are no identifiable cold wallet reserves for QuadrigaCX” and “QuadrigaCX has not been truthful with regards to their inability to access the funds needed to honour customer withdrawal requests. In fact, it is almost impossible to believe that this is the case in lieu of the empirical evidence provided by the blockchain”. However, they do point out that this is the author’s opinion.
There are 115,000 QuadrigaCX users who hold balances in their personal accounts.