Quadriga: Cryptocurrency exchange founder's death locks $140m
- Published
Cryptocurrency is digital, or virtual only, currency
Canada's largest cryptocurrency exchange is unable to access millions in digital currency following the sudden death of its founder.
Quadriga has filed for creditor protection and estimates that about C$180m ($137m; £105m) in cryptocurrency coins is missing.
It has not been able to locate or secure its cryptocurrency reserves since Gerald Cotten died in December.
Cotten, 30, had sole responsibility for handling the funds and coins.
In court documents filed with the Nova Scotia Supreme Court on 31 January, his widow Jennifer Robertson, says the laptop on which Cotten "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," the affidavit states.
The company hired an investigator to see if any information could be retrieved but ongoing efforts have had only "limited success in recovering a few coins" and some information from Cotten's computer and phone.
The company is also investigating whether some of the cryptocurrency could be secured on other exchanges, according to court files.
They say about 115,000 Quadriga users hold balances in their personal accounts in the form of cash obligations and cryptocurrency.
The company estimates it owes about C$250m ($190m; £145m) - including C$70m in hard currency.
The affidavit says the majority of the cryptocurrency was kept by Quadriga in a "cold wallet" or "cold storage", which is located offline and used to secure cryptocurrency from hacking or theft.
Liquidity problems for the British Columbia-based company began in January 2018 when Canadian bank CIBC froze C$25.7m linked to its payment processor after the bank had difficulty determining who were the owners of the money.
Those problems have been compounded by Cotten's passing.
The founder died unexpectedly due to complications with Crohn's disease while travelling in India, according to court documents.
In a statement posted online last Thursday, Quadriga said it is working to address its "liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallet".
The company is due in court in Nova Scotia on Tuesday for a preliminary hearing on appointing firm Ernst and Young as an independent monitor to oversee the proceedings.
- Published23 January 2019
