Startup News

Millions in crypto “may be lost” after exchange founder takes password to his grave

Stephanie Palmer-Derrien /

Canadian cryptocurrency exchange QuadrigaCX may have lost CAD$250 million ($263.3 million) of account holders’ funds, after its founder Gerald Cotten died, taking the password with him.

According to a sworn affidavit signed by Cotten’s widow Jennifer Robertson, the founder was the only person who had access to the ‘cold wallet’, where the funds were securely stored.

Since his death from Crohn’s disease in India in early-December 2018, no one has been able to access them.

In the affidavit filed with the Nova Scotia Supreme Court, and first shared with Coindesk, Robertson said about 115,000 account holders are affected.

In total, the exchange owed users about CAD$70 million in fiat Canadian dollars, and CAD$180 million worth of cryptocurrencies including Bitcoin, Bitcoin Gold, Ether and Litecoin.

While some funds on the exchange were kept in a ‘hot wallet’ one connected to the internet and accessible to users  the majority were stored in a cold wallet.

“The normal procedure was that Gerry would move the majority of the coins to cold storage as a way to protect the coins from hacking or virtual theft,” the affidavit says.

While Robertson has her late husband’s laptop, which he used to carry out company business, it is encrypted “and I do not know the password or security key”, she said in the document.

“Despite repeated and diligent searches, I have not been able to find it written down anywhere,” she added.

Robertson has hired an expert to help gain access to the funds, but to no avail.

“Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost,” she admits in the affidavit.

At the end of January, Coindesk reported the exchange had filed for protection from creditors a step to help it avoid bankruptcy.

In a statement, the board of directors said this was to address “significant financial issues”, and said the exchange had “worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant crypto reserves held in cold wallets”.

However, according to a report from CCN, all may not be as it seems.

There are some suspicious circumstances around the Quadriga debacle, including a delay of a month before the founder’s death was announced, reports that he changed his will just two weeks before he died, and unconfirmed allegations that another co-founder is, in fact, a convicted fraudster operating under an assumed identity.

NOW READ: Don’t get caught up in the crypto bubble, Freelancer’s Matt Barrie warns startups

NOW READ: Bitcoin in your pocket: Singapore startup brings cryptocurrency into the physical realm

Advertisement
Stephanie Palmer-Derrien

Stephanie Palmer-Derrien is the editor at StartupSmart. You can contact her at [email protected].

FROM AROUND THE WEB