QuadrigaCX, Canadian crypto exchange says that it cannot pay back the client-holding worth $190 million and thus asks for creditor protection as their founder and the only person having access to the password of cold storage is no more alive.
Gerald Cotten, the 30-year-old founder and CEO of QuadrigaCX, the largest crypto exchange of Canada died in India in December last year. His sudden demise has caused a panic among thousands of customers with frozen assets, as per a report by Coindesk.
Jennifer Robertson, the widow of the founder, noted in a sworn affidavit that the company owes an amount of $190 million to its clients. The affidavit with Nova Scotia Supreme Court further states that this figure constitutes fiat money as well as cryptocurrencies.
As reported by CoinDesk, after months of transactions delays, the company seeks creditor protection on the grounds that in the absence of the correct password, it is unable to access the funds lying in “cold storage”. For transfers, a small number of funds stored in “hot wallet” are utilized.
In the affidavit, the amount is bifurcated roughly into 11,000 units of Bitcoin Cash SV (amounting to $707,000), 26,500 units of Bitcoin (worth $92.3 million USD), 11,000 units of Bitcoin Cash (worth $1.3 million), 35,000 units of Bitcoin gold (amount of $352,000), 430,000 units of Ether (worth $46 million) and 200,000 Litecoin (worth $6.5 million). The total comes to $147 million, according to the affidavit.
However, there is a lack of clarity over what part of the company’s crypto holding was lying in the cold storage, and how much was kept in the hot wallet. Jennifer mentioned in the affidavit that only a limited number of coins are kept in the hot wallet, but it lacks the specifics.
Robertson is the executor of Cotten’s estate and owns 43 percent of the shares of QuadrigaCX. She said that the company had over 115 thousand clients. As per Robertson, Cotten was solely responsible for dealing with the funds and coins, and the other people of the company had absolutely no access to the stored funds.
Some experts from the industry, taking cues from this unfortunate incident, say that there is a need for the government to regulate cryptocurrencies exchange and take necessary actions to protect the rights of the customers.
The company publicly announced regarding the death of Gerald Cotten somewhere in mid-January. They said, “Cotten died on 9th December 2019 because of the complications associated with Crohn’s disease. The founder at the time of his death was traveling in India regarding a noble cause of building an orphanage for the needy and destitute orphan children.”
The laptop of the deceased CEO is in possession of Robertson. Yet, she specifically told in her statement to CoinDesk that she has no knowledge of the password. Further, the IT expert hired by the company is not able to bypass the encryption.