Technology 3 min read

QuadrigaCX in Crisis Following Founder's Death

Quadriga CX, reeling after the death of their founder Gerald Cotten, has filed for creditor protection after revealing that only Cotten knew the password to their cryptocurrency wallet. But, could this all be a smokescreen for other dealings?

Gerald Cotten, QuadrigaCX CEO and founder | image courtesy of PNG

Gerald Cotten, QuadrigaCX CEO and founder | image courtesy of PNG

QuadrigaCX crypto exchange could face a multimillion-dollar debt after losing access to its cold storage database. Apparently, only QuadrigaCX’s founder Gerald Cotten had the password to the cold funds database. Unfortunately for the rest of the company, he died unexpectedly last December in India.

According to an affidavit filed by Cotten’s widow, Jennifer Robertson, the company currently owes its customers $250 million CAD ($190 million USD) in both cryptocurrency and fiat. The company subsequently announced its filing for creditor protection, citing its present predicament and disclosing the amount of money the company currently has access to.

At the moment, QuadrigaCX holds a total of $147 million USD which includes:

  • about 26,500 bitcoin ($92.3 million USD),
  • 11,000 bitcoin in cash ($1.3 million USD),
  • 11,000 bitcoin cash SV ($707,000 USD),
  • 35,000 bitcoin gold ($352,000 USD),
  • nearly 200,000 litecoin ($6.5 million USD), and
  • about 430,000 ether ($46 million USD)

Robertson further said that “only a minimal amount of coins” are stored on the crypto exchange’s “hot wallet,” but she did not disclose any specific value. The widow also said in her affidavit that Cotten had “sole responsibility for handling the funds and coins.”

Read More: 3 Cryptocurrency Scams Worth Watching Out For

Mysterious Death

According to QuadrigaCX’s announcement mid-January, Cotten died last December 9th “due to complications with Crohn’s disease” while in India for a charity event. Robertson has his laptop but said that she has no inkling what the password is.

The company previously employed technical experts to open the laptop but all efforts failed. Robertson also noted that Cotten left no business records regarding QuadrigaCX or any of its affiliated companies.

While Cotten’s widow included his death certificate in her filings and the Indian government already confirmed the death of a “Canadian man” in the country last December, many speculate that Cotten’s demise was fake and was just a part of an exit scam.

A Reddit user that goes with the handle “Palhello” pointed out that four wallets recently made transactions with the crypto exchange’s “hot wallet” right after QuadrigaCX went public with its dilemma.

The four QuadrigaCX crypto exchange wallets studied by Reddit user Palhello

“Any address that has input into the hot wallet are wallets that are fully in control of Quadriga (could also be an address that belongs to a Quadriga user whose private key belongs to Quadriga),” user Palhello said.

“If these are really cold addresses there should be no outgoing transaction from them if private key is lost. Regardless, the addresses posted are or at least used to be controlled by Quadriga.”

The crypto exchange also asked the Nova Scotia Supreme Court to enter a stay of proceedings to prevent customers from filing lawsuits and to give QuadrigaCX and its contractors more time to bypass the encryption and access the firm’s funds. The company is also thinking of selling its operating platform to pay off its debt although no interested parties have been mentioned on the affidavit.

Read More: Skycoin Employees Kidnap CEO, Steal His Life Savings

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Rechelle Ann Fuertes

Rechelle is an SEO content producer, technical writer, researcher, social media manager, and visual artist. She enjoys traveling and spending time anywhere near the sea with family and friends.

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