by Matthew Dove (Digital Editor)
Following the tragic and untimely demise of its founder, Gerald Cotten, the Canadian crypto exchange QuadrigaCX is facing difficulties, 190 million of them to be precise…
In a affidavit filed on Friday with the Nova Scotia Supreme Court (NSSC), Jennifer Robertson, Cotten’s widow, claimed the exchange owes its users around 190 million US dollars (USD) worth of fiat and cryptocurrency. QuadrigaCX had announced a day earlier that it had filed for creditor protection with the NSSC and admitted to users that efforts to “locate and secure our very significant cryptocurrency reserves” have “not been successful.”
Complications regarding the storage of funds arose from the fact the Cotten was the sole director and officer of what has become Canada’s biggest crypto exchange since its launch in 2013. Following his death in mid-January (from a Crohn’s related illness in India), the crypto pioneer’s encrypted laptop and USB back-ups have proved entirely inaccessible, denying Quadriga’s 115,000 information on the whereabouts of their deposits.
The crypto funds in question are believed to divided up as follows;
- 26,500 Bitcoin (92.3 million USD)
- 11,000 Bitcoin Cash (1.3 million USD)
- 11,000 Bitcoin Cash SV (707,000 USD)
- 35,000 Bitcoin Gold (352,000 USD)
- 200,000 Litecoin (6.5 million USD)
- 430,000 Ether (46 million USD)
Ironically, the cold storage solutions employed by Cotten to safeguard customer funds are the same measures which now leave them out in the cold without recourse. It’s yet to be established how much of the exchanges holdings are in cold storage but Robertson has been quoted as saying that “only a minimal amount of coins” are kept in hot storage (i.e. online and in more readily available locations).
The predicament that QuadrigaCX and its customers find themselves in highlights the pitfalls of having a third party with “sole responsibility for handling the funds and coins.”
When asked if he saw this as an indication of cryptocurrency’s overall vulnerability, Nicholas Gregory, CEO of CommerceBlock told TFT that;
“Blockchain / cryptocurrencies did not fail here. It was an exchange. The moment you store your assets on an exchange you’re placing your trust in them … These are negative events and reflect poorly on this exchange itself.”
He continued by saying that preventative measures already exist for such situations and that more are on their way;
“Cryptocurrency already has tools for these challenges, such as multi-signature addresses. However it’s correct that the tooling for retail investors have to improve or the ones that already exist need more awareness … we are seeing more decentralised exchanges coming to the market and events like these will increase the demand for them.”
