When QuadrigaCX’s founder Gerald Cotten died last month, he took the private keys to Quadriga’s cold storage wallets with him.
The founder and CEO died from Crohn’s disease in December 2018. He was the only individual to know the private keys that could access $136 million USD in cryptocurrencies stored offline.
QuadrigaCX Creditor Protection
After the fact, the exchange was granted creditor protection by The Supreme Court of Nova Scotia. This meant it could take some time to try and recover the missing cryptocurrencies. It was also going to try to recoup its losses by unlocking a further $53 million USD in fiat currency held by payment processors.
According to CoinDesk: “The company sought to preempt any litigation from customers hoping to recoup their losses, according to the filing.”
What was Canada’s largest cryptocurrency exchange went offline completely in January.
QuadrigaCX and Ernst & Young
Nova Scotia Supreme Court Judge Michael Wood suggested that the company’s hot wallet funds be sent to the safety of new cold wallets maintained by the exchange’s court-appointed monitor Ernst & Young (EY).
Now, a report released today confirms this has happened. According to EY:
“On February 14, 2019, after testing the transfer arrangements, the Applicants successfully transferred the following cryptocurrency to the Monitor […] The Monitor will hold the cryptocurrency in cold storage pending further order of the Court.”
>> Coinbase Wallet Expanding with New Support for Bitcoin Cash
QuadrigaCX’s online wallets, or hot wallets, have been almost emptied and the funds sent to EY. The tally includes 52 Bitcoin (BTC), 960 Ether (ETH), 33 Bitcoin Cash (BCH), 2,000 Bitcoin Gold (BTX), and 822 Litecoin (LTC).
A Bad Situation
A month on from announcing the issue, QuadrigaCX has still had no success in recovering the frozen crypto. It also then made a bad situation worse by losing a further 100 Bitcoin earlier in February when it mistakenly sent them to the cold wallets that it cannot access. It did not reveal exactly how this happened.
What a sudden downfall for QuadrigaCX, the largest crypto exchange in Canada. Is this a clear example of one issue with the security measure of the crypto private key system? What do you think?
Featured Image: QuadrigaCX