Millions in cryptocurrencies frozen after Canadian founder's death

Millions in cryptocurrencies frozen after Canadian founder's death

As first reported by CoinDesk, Jennifer Robertson, widow of Gerald Cotten, founder of the QuadrigaCX cryptocurrency exchange, filed a sworn affidavit with the Nova Scotia Supreme Court last week, revealing that the company is unable to open up a security system that is preventing users from accessing the contents of their Bitcoin wallets, which are valued at around $190 million United States dollars.

Digital-asset exchange Quadriga CX has a US$200 million problem with no obvious solution - just the latest cautionary tale in the unregulated world of cryptocurrencies.

News of his death became public only after Robertson and the QuadrigaCX filed for credit protection in Canadian courts, saying they were unable to access Cotten's encrypted account that held the assets.

Cold wallets are encrypted and offline, making access to these digital storage units exceedingly hard if you don't know their access codes.

Cotten, 30, died in India last December from complications from Crohn's disease, according to the company.

What was the password again?

QuadrigaCX, which announced the death of Cotten in January - almost a month later - has also applied for creditor protection in the Nova Scotia Supreme Court to allow the troubled company to address its financial issues.

Ms Robertson added in the affidavit that she and her colleagues have had threats made against them from online cryptocurrency communities - especially from Reddit users.

Which means the 115,000 or so users with balances in cryptocurrency and/or fiat money on their account may be unable to collect the cash they are owed.

After Cotten died, QuadrigaCX employees tried to gain access to the company's cold wallets, but they either failed to get in or found the wallets held very little cryptocurrency.

"There's been some limited success", he said, adding that the computer has been examined by a retired RCMP officer with expertise in encryption technology.

His widow, Jennifer Robertson, in a sworn affidavit court document said Quadriga and the other companies had no offices and their business was conducted on Mr Cottens computer. Because of the inaccessible funds, the company apparently has less than US$500000 (~RM2.04 million) in cash.

The CEO's death certificate is attached to Robertson's affidavit.

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".

According to CoinDesk, the company is considering selling off its operating platform.

For those who missed the memo, QuadrigaCX, once Canada's largest and most popular BTC-focused exchanges, has always been under pressure.

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