The sudden death of a Canadian cryptocurrency exchange founder has left his company in quagmire, as he apparently took with him to the grave the only encrypted access to $190 million worth of cryptocurrency.
QuadrigaCX is Canada's largest cryptocurrency exchange. Customers use the platform to deposit funds in order to trade tokens like Bitcoin.
In Dec. 2018, QuadrigaCX's founder Gerald Cotten went to India to open an orphanage but on Jan. 15, his wife Jennifer Robertson revealed he died while traveling abroad. In a statement, QuadrigaCX said Cotten died on Dec. 9 due to complications with Crohn's disease.
Customers Unable To Access Funds
Cotten's death, however, left many of the company's customers unable to access their funds, prompting QuadrigaCX to file a creditor protection.
"Today an order for creditor protection in accordance with the Companies' Creditors Arrangement Act (CCAA) was issued to allow us the opportunity to resolve outstanding financial issues that have affected our ability to serve our customers," the company said in a statement issued Feb. 5.
QuadrigaCX said it cannot get hold of the funds stored in "cold storage," only the smaller amount in "hot wallet" that it uses for transfers.
Robertson revealed in a sworn affidavit that the company owes more than 90,000 customers about $190 million in cryptocurrency and in cash and only a minimal amount of these were stored in hot wallet.
Robertson explained that the normal procedure was that Cotten, being the CEO and founder of QuadrigaCX, would move majority of the coins to cold storage to protect these from hacking and other virtual thefts.
Encrypted In A Single Laptop
While Robertson has Cotten's laptop, the device is encrypted and she does not know the password. A technical expert recruited by the firm was unable to bypass the encryption. She also said Cohen did not leave behind any business records.
"The laptop computer from which Gerry carried out the companies' 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," Robertson said.
The platform continued to accept funds even after Cotten's death but this was eventually paused by the directors on Jan. 26.