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Crtyptocurrency exchange founder Gerald Cotten died of complications from Crohn's disease back in December and now some 115,000 clients are left unable to retrieve approximately $190 million in funds.
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It turns out only Cotten knew the password for the Canadian cryptocurrency exchange to gain access.
QuadrigaCX was one of only a handful of cryptocurrency exchanges available to Canadian online gamblers, many of whom have expressed apprehensions in using competing exchanges as a reult of the current upheaval involving QuadrigaCX.
The story gets all the more absurd as it appeared that Cotten's exchange was already in financial and legal trouble prior to Cotton's death. He had also filed a will the week prior.
CoinDesk revealed that QuadrigaCX had undergone creditor protection in the Nova Scotia Supreme Court.
From CoinDesk.com:
Evidently Cotten was the sole person responsible for transferring QuadrigaCX funds between the company’s “cold wallet” – secure, offline storage – and its “hot wallet” or online server, according to court documents. Very little cryptocurrency was stored in the hot wallet for security purposes. Cotten’s laptop was encrypted, and his widow, Jennifer Robertson, and the expert she hired have been unable to access any of its contents. The company had no corporate bank accounts and used third party services to manage payments and withdrawals.
“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us,” QuadrigaCX’s Board of Directors wrote in a letter to customers on Jan. 31. “Unfortunately, these efforts have not been successful.”
The debacle highlights the problems with cryptocurrency’s lack of regulation. It’s not issued by a government or controlled through a centralized financial institution, leaving exchanges such as QuadrigaCX with near total control over investors’ assets, and making them vulnerable to hackers or other mishaps.
Other legal problems included the Canadian Imperial Bank of Commerce freezing more than $25 million of QuadrigaCX’s assets after noticing “irregularities” in the exchange’s payment processes. In what appears to be an odd coincidence, the Ontario Superior Court of Justice took control of the funds, Coindesk reported, and they were just returned to the company days before Cotten’s death.
On the popular social media platform Reddit, conspiracy theories have arisen that Cotten faked his own death.
We need: *The cold wallet addresses *Picture(s) of the corpse *Canadian Passport documentation of Gerald Cotton leaving Canada, flying to/arriving in India, and the dates *If possible (unlikely), surveillance of him at the airport with his luggage (to see a laptop) and the people flying with him.
The company is looking into selling its operating platform to stay afloat, which matters little to those who can't their funds out of the troubled exchange.
- Aaron Goldstein, Gabling911.com
