The CEO of the Canadian exchange is reported to have died, taking the private keys to its cold storage with him. Not everyone is convinced.

Back in January 2015, the bear market was a little over a year old. It had been a tough year, with existential questions asked of bitcoin and blockchain. Then, when hope was waning and the digital currency was on the ropes, in came the knockout blow. Bitstamp was hacked, with the loss of 19,000 BTC – then worth around $5 million. The exchange went offline, and the price data simply shows a gap for that period. When it came back online, it wasn’t long before traders threw up their hands and capitulated, driving the price down to a low of $155. Bitcoin swiftly met powerful buying pressure, bringing it back above $200, where it ultimately stabilised. Thus the 2014 bear market ended much as it had begun, with the hack of a major exchange (the first, for the uninitiated, being MtGox in February 2014).

History doesn’t repeat but it rhymes, and it’s interesting that we have just seen another major exchange shut its doors – probably for good. The story of Quadrigacx has attracted plenty of attention, for various reasons. The loss of the private keys to cold storage – containing the vast majority of the exchange’s funds – as well as the apparent loss of access to its fiat accounts (presumably temporary), has left its traders gnashing their teeth in anguish. $190 million is in the wind. How, in 2019, after all we have learned, could this have happened?

There are many twists in the story. Naturally, there is a conspiracy theory that the CEO, Gerald Cotten, did not die in India, as claimed. Presumably it is a trivial thing to purchase a death certificate from corrupt officials with the right connections and tens of millions of dollars in virtual currency. Then there is the report that uses blockchain analysis to evidence the likelihood that Quadrigacx never had the crypto it claimed; it was supposedly running a fractional reserve and paying withdrawals from new deposits. Then Jesse Powell, CEO of Kraken – who has noted how convenient were the timing of the death and the circumstances of the lost funds for a troubled exchange – tweeted that Quadrigacx had apparently been using Kraken to store crypto.

We have thousands of wallet addresses known to belong to @QuadrigaCoinEx and are investigating the bizarre and, frankly, unbelievable story of the founder’s death and lost keys. I’m not normally calling for subpoenas but if @rcmpgrcpolice are looking in to this, contact @krakenfx

There is now a petition for Kraken to take over the running of what remains of Quadrigacx. Needless to say, the weight of evidence is stacking up and this is looking more and more like an Exit Scam with every passing hour. If so, that crypto is not off the market, locked forever in a forgotten cold storage account.

So one of the wider questions this episode raises is: Is Quadrigacx to 2019 what Bitstamp was to 2015?

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