A Canadian cryptocurrency exchange called QuadrigaCX owes its clients a staggering $262 million it can’t get to because the only person who had access to the money has died, CoinDesk reports.
Gerald Cotten was the founder of the company and according to his widow, Jennifer Robertson, he was the only one with the password required to access and transfer the majority of client money. She also said he held “sole responsibility for handling the funds and coins”.
Cotten’s death was announced by the company earlier this month, stating that he died from complications due to Crohn’s disease while in India in December 2018. He was there to open an orphanage as a home and refuge for children in need.
QuadrigaCX has since applied for creditor protection because it can’t bypass the encryption to “cold storage,” where most of its clients’ money is kept. It does, however, have access to the “hot wallet,” but the amount in there is nowhere near enough to get them out of trouble.
“The normal procedure was that [QuadrigaCX founder and CEO Gerald Cotten] would move the majority of the coins to cold storage as a way to protect the coins from hacking or other virtual theft,” Robertson said in a sworn affidavit with the Nova Scotia Supreme Court.
The exchange holds a great deal of crypto, including bitcoin, bitcoin cash, bitcoin cash SV, bitcoin gold, litecoin, and ether. While Robertson has her late partner’s laptop in her possession, an expert hired by her has not been able to bypass the encryption on the account. In other words, the entire business was essentially run from a single laptop and only one person ever knew the password.
Some are noting that the circumstances surrounding Cotten’s death are just a little too strange, going as far as to suggest he faked his own death as some kind of exit strategy based on some strange behaviour surrounding the man’s financial dealings.
QuadrigaCX had $36 million worth of its assets frozen by the Canadian Imperial Bank of Commerce when it found “irregularities with payment processing” in January of 2018. While this has since been resolved, the company says ongoing issues are adding to difficulties with accessing client money.
According to CoinDesk, the company “urgently needs a stay of proceedings which will allow Quadriga and its contractors additional time to find whatever stores of cryptocurrency may be available and also to negotiate the bank drafts available to Quadriga.”
Whether any of QuadrigaCX’s clients will get their money back is uncertain, but judging from the number of stories you hear of people not able to access their own accounts after discovering what they bought years ago is now worth millions, it’s looking pretty grim.
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