Reported $190 Million of Quadriga Users’ Assets Frozen in Cold Wallets Controlled by Dead CEO

0
141
Reported $190 Million of Quadriga Users' Assets Frozen in Cold Wallets Controlled by Dead CEO
Reported $190 Million of Quadriga Users' Assets Frozen in Cold Wallets Controlled by Dead CEO

A Vancouver startup cryptocurrency platform, Quadriga CX, faces huge financial problems as the death of Co-Founder, Gerald Cotten, left more than 115,000 customers’ funds inaccessible in “cold wallets.” The encryption keys and passwords for these wallets are seemingly gone with the death of CEO Cotten. Despite the allegations that the death is fake which Cotten’s widow has received made by Reddit users, J.A. Snow Funeral Home in Halifax issued a statement of Cotten’s death found in the CCAA filings. Mr. Cotten died due to Crohn’s disease complications on December 9, 2018 at age 30. This was just 6 years after his original diagnosis with Crohn’s. At the time of his death, he was working to open an orphanage in India.

CEO Gerald Cotten had sole access to $190 million worth of cryptocurrencies in Bitcoin and Ethereum. “Cold wallets” are a storage system for cryptocurrencies that can run offline that protects the funds from hackers and thieves. Separate investigations of their Bitcoin indicate that they have not, in fact, lost control of their Bitcoin.

“Quadriga was unable to access the cold wallets and/or discovered that the cold wallets contained minimal cryptocurrency units,” explains a report filed with the court by Ernst & Young.

Quadriga was run by Cotten on his laptop and phone. Cotten worked with website architect Alexander Hanin to develop and manage the platform starting back in 2013. Alexander manages the cryptocurrency website as a contracted developer through Connect Development Ltd, a UK registered company.

Cotten’s widow, Jennifer K. M. Robertson, signed an affidavit stating, “Prior to Gerry’s death, he was the sole officer and director of each of the companies…To the best of my knowledge, most of the business of the Companies was being conducted by Gerry wherever he and his computer were located. This was most often at our house in Fall River, Nova Scotia.”

In 2018, the SEC cracked down on cryptocurrency fraud with settlements.  Lawmakers in The House sought to pass 2 bills (U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018 and Virtual Currency Consumer Protection Act) for regulating cryptocurrency market manipulation and studying the use and economic impact of various regulatory methods internationally.

In the aftermath of Cotten’s untimely death and sole knowledge of these accounts an estimated total of $250 million is owed to customers by Quadriga.

Is the financially devastating fallout of Cotten’s death an organic result of less protective industry standards of cryptocurrency?

Will lawmakers find a solution to define business practices and regulations to facilitate transparency among trade companies and users in such a volatile market? There are more than 1600 cryptocurrencies available on the internet as of August 19, 2018.

Sources: Twitter, Scribd, SEC.gov, CNBC

LEAVE A REPLY

Please enter your comment!
Please enter your name here