BOOM: Cryptocurrency holders may lose their $145 million

The death of Gerald Cotten, the Chief Executive Officer of Digital-asset exchange Quadriga CX has left one question unanswered, how do the company’s customers recover their combined C$190 million ($145 million)?

This is a multi-million dollar question that only the late Cotten can answer, unfortunately for Quadriga CX’s customers. According to reports, Cotten died with the password that unlocks Quadriga CX’s digital “wallets” that houses the C$190 million. The “wallets” is an application that stores the keys to send and receive cryptocurrencies.

Buying and selling cryptocurrency is one of the more recent financial instruments people are using to diversify their investments, and there is very little stopping you from doing the same. But before diving headfirst into this world, there are some important guidelines you should make every effort to know, but who would have known this bizarre event could happen.

Cotten had died last year, December 9, 2018, in India from complications of Crohn’s disease, without transferring the passwords. This has prevented the online startup from retrieving about C$190 million ($145 million) in Bitcoin, Litecoin, Ether and other digital tokens held for its customers, according to court documents filed January 31 in Halifax, Nova Scotia.

Why is it so difficult to retrieve?

According to an affidavit from his widow, Jennifer Robertson, Cotten, who died at the age of 30, was described as a conscious person when it comes to security, prompting the encryption of the laptop, email addresses and messaging system he used to run the 5-year-old business.

Cotten moved the “majority” of digital coins into cold storage to avoid being hacked. He was said to have taken sole responsibility for the handling of funds and coins and the banking and accounting side of the business.

In a Bloomberg report, virtual currency exchanges suffered at least five major attacks last year. Japan, home to some of the world’s most active digital-asset exchanges, has also hosted two of the biggest known crypto hacks: the Mt. Gox debacle of 2014 and the theft of nearly $500 million in digital tokens from Coincheck Inc. last January. This makes his security measures understandable.

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External support from hack experts

In a court filing, experts have been contacted to hack Cotten’s other computers and mobile phone, but they have been unsuccessful in hacking the systems, while attempts to circumvent an encrypted USB key have been foiled. The wife, Robertson notified the court that she can’t find his passwords or any business records for the company.

“after gerry’s death, quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost,” robertson said.

Adding that the company’s access to currency has been “severely compromised” and the firm has been unable to negotiate bank drafts provided by different payment processors.

Quadriga CX response

Quadriga CX’s directors informed the public that it was asking the Nova Scotia court for creditor protection while they address “significant financial issues” affecting their ability to serve customers, this was made known through a notice on the firm’s website on January 31. A hearing is scheduled for Tuesday, and Ernst & Young has been chosen as a proposed monitor.

“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.

“unfortunately, these efforts have not been successful.”

Class-action lawsuits against Quadriga CX

On Reddit’s online forums, there have been calls for customers to file a class-action lawsuit against Quadriga CX. This reaction is born from the belief that cryptocurrency business is a scam, even though how cryptocurrency work is readily available online. Aside from the lawsuit being clamoured, some are questioning whether the CEO, Cotten is truly dead. While the latest online speculation suggests that Quadriga CX funds have been moving, even though the firm claims they can’t get access.

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Author: see naija

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