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Crypto Exchange Lost Access to CAD 190 Mn after CEO Dies with Sole Password of Cold Storage Wallet

February 05, 2019 17:07
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For this Canadian crypto exchange QuadrigaCX, the move to secure the exchange from hack and other security breach has backfired and now customers can only hope for a miracle to rescue them.

The exchange’s 30-year-old founder Gerald Cotten has died unexpectedly in December and he was the only person who knew the passwords of the exchange’s cold storage wallet. And, now the exchange has completely lost access cryptocurrencies worth CAD 190 million ($135 million).

The matter has now reached the court, in which Cotten’s widow Jennifer Robertson in an affidavit said that a significant part of the cryptocurrency balance is held in cold storage wallet and deceased Cotten was the sole holder of access to the coins.

As per the affidavit, cold storage wallet holds around 26,000 Bitcoins, 11,000 Bitcoin Cash, 11,000 Bitcoin SV, 35,000 Bitcoin Gold, around 400,000 Ether and around 200,000 Litecoin.

Robertson in the affidavit written:

“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.

Kraken exchange has reportedly offered a little help to the affected customers of the QuadrigaCX exchange and its founder Jesse Powell has written in a tweet:

“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 into this, contact @krakenfx”

QuadrigaCX also issued a statement saying:

“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. Unfortunately, these efforts have not been successful. Further updates will be issued after the hearing,”

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The matter is really concerning given the fact that millions of dollars of customers funds are lost. All the crypto exchanges functioning around the world should have a proper common laid down risk management procedures and duties of individuals to avoid such kind of instances.

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