Business

Cryptocurrency Exchange Can’t Access $190 Million As CEO Dies With Sole Password

PRERNA YADAV | 0
4318
| February 6 , 2019 , 15:54 IST

Quadriga, Canada's biggest cryptocurrency exchange, said it's unable to gain access to $145 million of bitcoin and other digital assets after Gerald Cotten, its 30-year old CEO and co-founder, died of complications arising from Crohn's Disease while traveling in India.

The company, QuadrigaCX, said in court filings that the CEO, Gerald Cotten, was the only person who knew the security keys and passwords needed to access the funds.

Many of the digital currencies held by Quadriga are stored offline in accounts known as "cold wallets," a way of protecting them from hackers. Cotten is the only person with access to the wallets, according to the company.

In an affidavit, his widow, Jennifer Robertson, wrote that her husband had run the business from an encrypted laptop, working mostly out of their home in Fall River, Nova Scotia. Robertson did not know the password or recovery key and could not find them written down anywhere “despite repeated and diligent searches,” she wrote.

Robertson said she also hired an expert to find the cryptocurrency in “cold wallets” stored offline, with little success.

While other crypto exchanges have lost their clients’ money, this appears to be the first one that has said it actually lost the keys to its accounts.

Cryptocurrencies are a form of digital currency that use encryption techniques to control their creation and secure transactions independent from a central bank. These encryption techniques make it very difficult to create any kind of counterfeit money or have the accounts hacked.

The Canadian company Cotten co-founded, QuadrigaCX, revolves around users depositing funds into their QuadrigaCX account and then trading various cryptocurrencies — predominately Bitcoin — with other users. Its database has around 363,000 users.

A number of web-based conspiracies have been speculated on forums such as Reddit about the locked up cryptocurrency, and Robertson claims she has received a number of threats since Cotten’s death.

QuadrigaCX has posted a letter from its board of directors telling customers that the website will be updated after Tuesday's court hearing.

Even before Cotten's death, Quadriga was struggling to cope with transaction delays and other problems after legal disputes with a large bank and payment processors resulted in tens of millions of dollars being frozen.

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