$190 million lost in ether as Canada's cryptocurrency exchange CEO dies with password
The company has lost over $190 million in deposits due to the password setback.
(Web Desk) - Canada’s largest cryptocurrency exchange, QuadrigaCX suffered a major loss after its CEO passed away while taking the password to his grave which provides access to customer funds.
The company has lost over $190 million in deposits due to the password setback. "We did not enter into this decision lightly," QuadrigaCX said in a statement.
The company said that it had spent the past weeks working "extensively to address our liquidity issues," which includes locating the money its customers had deposited.
"Since we were unable to resolve these issues in a timely fashion, we did not want trading to continue on our platform," the company added. As of Tuesday afternoon, its website was taken offline.
In an unexpected turn of events, CEO Gerald Cotten lost the battle of life at the age of 30 from Crohn’s disease while traveling in India on Dec. 9.
The Nova Scotia Supreme Court has given a 30-day respite to the company to avoid bankruptcy and device a way to pay debts.
The money is now “unavailable and some of it may be lost,” according to court filings by Robertson, wide of the CEO and executor of his estate.
"The laptop computer from which Gerry [Cotten] carried out the Companies’ business is encrypted, and I do not know the password or recovery key,” Robertson said in her filed affidavit. She even hired an expert, who was unable to break through the encryption to access the funds.
Cryptocurrencies are a form of digital currency that use encryption techniques to control their creation and secure transactions independent from a central bank. These encryption techniques make it very difficult to create any kind of counterfeit money or have the accounts hacked.
The Canadian company Cotten co-founded, QuadrigaCX, revolves around users depositing funds into their QuadrigaCX account and then trading various cryptocurrencies — predominately Bitcoin — with other users. Its database has around 363,000 users.
Within QuadrigaCX’s database, the currency is divided between a hot wallet (coins in the server) and a cold wallet (an offline storage area to protect the coins from hackers). The business was essentially centered around Cotten. He had no physical office and the work was done through his personal laptop. Transferring the coins between wallets was Cotten’s task alone.
QuadrigaCX’s "cold wallets" contain inaccessible assets belonging to around 115,000 customers, according to Robertson’s court filings.
Now, QuadrigaCX may have to put itself up for sale in an effort to distribute funds to its clients, according to Robertson’s affidavit.
