One of Canada’s biggest Bitcoin (BTC) exchange – QuadrigaCX – has possibly lost $190 Million in cryptocurrencies after its founder and CEO died suddenly last December in India due to Crohn’s disease. The death of its CEO , Gerald Cotten, was announced by the exchange early January this year. To date, the team at the exchange has been unable to access the locked up Bitcoin (BTC), Bitcoin Cash, Bitcoin SV, Bitcoin Gold, Litecoin, and Ethereum.

Cotten mostly worked from his home computer which was encrypted. The late Cotten’s wife, Jennifer Robertson, stated via an affidavit, that she did not know the password or recovery key despite hiring a cyber-security expert to attempt accessing the machine.

The laptop computer from which Gerry carried out the companies’ business is encrypted and I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere. I have retained an expert, Chris McBryan, Insp (retired), who I understand to be highly qualified in this area, to assist in recovering any information about the Companies and the Quadriga business records. To date, the expert has had some limited success in recovering a few coins and some information from Gerry’s cell phones and other computer, but not yet from the main computer he used to conduct business. Efforts to recover the business records are ongoing.

Founder had Sole Access to Cold Wallets

Mr. Cotten surprisingly had sole access to the crypto exchange’s cold wallets where user funds were securely stored. Major exchanges such as Coinbase and Binance usually store a large portion of their funds in cold storage to prevent attacks from hackers and other possible security issues. The cold storage used by these other exchanges usually has a multi-signature system to enable access to the funds in extreme circumstances. In the case of QuadrigaCX, no such measures were taken.

The CEO of Binance, Changpeng Zhao, took to twitter to express his thoughts on the entire situation.

That's sad. There are many solutions to split private keys or signing to achieve 3/5, 5/7 etc. Never neglect security. Also, never have CEO carry private keys. Bad on many levels. Personally, in good health and intent to live longer and prosper. Thx for asking. Stay #safu. https://t.co/4uPQnXNN2D — CZ Binance (@cz_binance) February 2, 2019

Exchange Files for Creditor Protection

Users attempting to access the QuadrigaCX website are met with a message that states that the exchange has applied for creditor protection in accordance with the Companies’ Creditors Arrangement Act (CCAA) in Nova Scotia. The full statement can be found below.

Dear Customers, An application for creditor protection in accordance with the Companies’ Creditors Arrangement Act (CCAA) was filed today in the Nova Scotia Supreme Court to allow us the opportunity to address the significant financial issues that have affected our ability to serve our customers. The Court is being asked at a preliminary hearing on Tuesday February 5 to appoint a monitor, Ernst & Young Inc., as an independent third party to oversee these proceedings. 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. Further updates will be issued after the hearing.

Frustrated Users

Clients of the exchange took to social media to express their concerns about the happenings at the exchange. One such user on Reddit requested for proof of death or even an obituary to confirm the passing of Mr. Cotten. The user cited that his death in India was questionable and such proof will allay any doubts to the story.

What are your thoughts on the situation at QuadrigaCX exchange? Please let us know in the comment section below.

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