The hottest drama hogging the digital currency headlines is the shutdown of crypto exchange QuadrigaCX, the ensuing loss of $190 million worth of client funds following the death of its founder and the widespread allegations of an exit scam.
No password, no money
Canadian digital cash exchange QuadrigaCX has disclosed that it cannot repay most of its clients to the tune of $190 million following the recent demise of its 30-year-old founder Gerald Cotten, who happens to be the only person with access to the exchange’s “cold storage facility,” password.
Cotten passed away in India in December last year, based on a Coindesk report, Friday.
QuadrigaCX recently filed for creditor protection, and in a sworn affidavit with the Nova Scotia Supreme Court, Cotten’s wife Jennifer Robertson bared that the crypto exchange owes its clients some $190 million.
In order to protect its client’s funds from hacking, a portion of its user-coins were deposited in a “cold wallet” storage — a physical device that is not connected to the internet.
What now?
Based on the court filing, it was revealed that the exchange holds approximately 26,500 bitcoin ($92.3 million), 11,000 bitcoin cash ($1.3 million), 11,000 bitcoin cash SV ($707,000), 35,000 bitcoin gold ($352,000), almost 200,000 litecoin ($6.5 million) and around 430,000 ether ($46 million), with a total amount of $147 million.
This latest fiasco has fanned more negativity on the use of bitcoin. “It’s a tough lesson learned,” Calgary client Elvis Cavalic – who had been unable to withdraw $15,000 in holdings – shared to CNBC.
Cavalic said he “would probably avoid bitcoin in the future,” adding that “it has left us completely in the dark. I’m kind of preparing for the worst.”
Veering away from allegations of an exit scam, CoinShares executive Meltem Demirors shared his own views on the issue of crypto storage management in a Tweet:
1/ beyond horrifying. canada's largest exchange @QuadrigaCoinEx
– founder dies suddenly
– no one has private keys to wallets
– fiat balances inaccessibleoperational security and continuity planning is ESSENTIAL – for both a business *and* an individualhttps://t.co/lDFNBZtq7o
— Meltem Demirors (@Melt_Dem) February 1, 2019
What’s the next step for QuadrigaCX? Will the exchange’s clients ever get their money back? Share us your opinion in the comments below.