Cryptocurrency investors locked out of $190m after exchange founder dies -

BarberFerdinand

True & Honest Fan
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https://www.theguardian.com/technology/2019/feb/04/quadrigacx-canada-cryptocurrency-exchange-locked-gerald-cotten (http://archive.fo/g4ES5)
About $190m in cryptocurrency has been locked away in a online black hole after the founder of a currency exchange died, apparently taking his encrypted access to their money with him.
Investors in QuadrigaCX, Canada’s largest cryptocurrency exchange, were unable to access their funds after its founder, Gerald Cotten, died last year.

According to a court filing first reported by CoinDesk, a cryptocurrency news and events company, Jennifer Robertson, identified as Cotten’s widow, said the exchange owes its customers roughly C$250m (US$190m) in cash and cryptocurrency held in its “cold storage”.

“Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost,” Robertson wrote in the filing.

Cotten, 30, died in India last December from complications from Crohn’s disease, according to the company. He was in India “opening an orphanage to provide a home and safe refuge for children in need”.

The news followed a decision by Canadian Imperial Bank of Commerce (CIBC) to freeze $28m of assets held by Quadriga after saying it was unable to identify the real owners of the funds.

Robertson was not involved in the business. In the filing she noted that there had been a “significant amount of commentary on Reddit and other web based platforms about Quadriga, Gerry’s death (including whether he is really dead) and missing coins”. She said she had also received threats and slanderous comments.

Robertson has access to Cotten’s laptop but writes that she is unable to open it. “The laptop computer from which Gerry 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.”

Robertson has retained an expert to try to access the funds but he has so far not been able to do so.

The platform continued to accept funds after Cotten’s death but was paused by directors on 26 January.

On 31 January, QuadrigaCX filed an application for creditor protection with the supreme court of Nova Scotia, after months of transaction delays.

At a court hearing on 5 February the company is seeking to appoint Ernst & Young as an independent monitor.
 
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DangerousGas

Chaotic Bald
True & Honest Fan
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This is a terrible starting post.

I read about this a day or so back, and basically the guy who ran this crypto exchange kept all the core keys on a heavily encrypted laptop, that only he had the passwords for. Ergo, when he croaked, everyone else was fucked.
Mildly lulzy, but meh.
 

Jeb-sama

The clapping will be mandatory
kiwifarms.net
Obligatory


Still if anybody is autistic and obsessive enough to jewcrack the password then its the crypto kiddies. Especially when they have a fifth of a billion dollarydoos on the line
Nah that shits too hard to crack

There's a few ridiculously large abandoned bitcoin wallets out there that have more than a billion dollars worth just sitting inside, completely untouched since 2010/2011
 

m0rnutz

Not a furry
kiwifarms.net
Nah that shits too hard to crack

There's a few ridiculously large abandoned bitcoin wallets out there that have more than a billion dollars worth just sitting inside, completely untouched since 2010/2011
Go on. Keep talking.
 

Jeb-sama

The clapping will be mandatory
kiwifarms.net

Slutpuppies

Muh necksleeve
kiwifarms.net
Talk about a comedy of errors... :thinking:



Canada's leading cryptocurrency exchange company has said it cannot repay $190m (£110m) to clients because its founder died with their passwords.

QuadrigaCX's founder Gerald Cotten, 30, died "due to complications with Crohn's disease" while travelling in India to open an orphanage in December, his wife Jennifer Robertson said.

Mr Cotten held "sole responsibility for handling the funds and coins" and no other members of the team could access the stored funds, she said in a sworn affidavit as she filed for credit protection on 31 January.

Ms Robertson said about $190m (£110m) in both cryptocurrency and normal money is in "cold storage" - where the company, or just Mr Cotten in this case, holds the key, not the client.

The founder held "sole responsibility for handling the funds and coins" and no other members of the team could access the stored funds, she added.

She has her husband's laptop but she does not know the password and a technical expert they hired had not been able to bypass its encryption, she told the court.

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.




On 31 January the company's board of directors applied for creditor protection, with Ernst & Young expected to be appointed on Tuesday to oversee the proceedings.

A statement from the board said: "For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us.

"Unfortunately, these efforts have not been successful."

QuadrigaCX customers have been complaining on social media that they have not been able to withdraw money from their accounts.

Ally Shapoval wrote: "Hello, Quadriga! I withdrew money from my Quadriga account to my bank more than 2 weeks ago. WHERE IS MY MONEY? STILL NOT THERE.

"I sent you emails, you are not responding."

Another wrote in French: "I have sent lots of emails, but I just get automatic responses, I'm not even able to get my crypto out."

Some are questioning whether Mr Cotten is even dead and others have accused the company of lying to them.

https://www.msn.com/en-gb/news/world/crypto-boss-dies-suddenly-with-password-to-clients-£110m/ar-BBTawfb?li=BBoPWjQ
 

not william stenchever

Pugio In Aversos
kiwifarms.net
So that's a lot of money just lying there. A government level entity of some kind is going to try to break into that shit, legally or otherwise.

QuadrigaCX's founder Gerald Cotten, 30, died "due to complications with Crohn's disease" while travelling in India to open an orphanage in December, his wife Jennifer Robertson said.
Jesus Christ he literally died in India while unable to streetshit. I just... did god cook up this whole "existance" thing so that the jokes would write themselves?
 

MuuMuu Bunnylips

I'm the greatest thing since World War 3.
kiwifarms.net
So that's a lot of money just lying there. A government level entity of some kind is going to try to break into that shit, legally or otherwise.
*Looks up from keyboard*

Huh? Yeah. Those fucking government types. Always trying to steal everyone's money.

*goes back to typing*

Don't mind me, I'm just looking up porn.

Yup. Just porn.

That's the ticket.
 

CrunkLord420

True & Honest Fan
kiwifarms.net
Yeah I've been following closely, here's the run down. I've been lazy to post it.

  • QuadrigaCX has had significant issues with banking and payment processors for over a year, including a large bank (CIBC) freezing millions of dollars in their bank account, which they had to take them to court over
  • As a result of their inability to process fiat withdrawals they've had a significant price premium, but the ability to arbitrage has been limited due to 1-3 month turn around.
  • QuadrigaCX has been functionally on fractional reserve during this time
  • This banking issue has not affected other Canadian exchanges, and seems to be targeted at QuadrigaCX for some unknown reason
  • There have been long persistent rumors that Michael Patryn (QuadrigaCX co-founder) is actually Omar Dhanani, a convicted felon and money launderer
  • The other QuadrigaCX co-founder Gerald Cotton gets married, has his will arranged to everything goes to his new wife (and $100k to both of his dogs), goes to India to build an orphanage for their honeymoon, dies from Crohn's disease which is apparently something you don't just suddenly fall over dead from.
  • Gerald Cotton was the only one with the cold wallet keys (despite claiming it was multisig), on his personal laptop (not a cold wallet), which he traveled with (a crime to bring that much money over borders). This is methodology (or lack thereof) is unheard of in exchange cold wallet operations.
  • No cold wallet addresses have been provided to the courts. People have been digging through blockchain analysis to identify them. The wife's affidavit states that Gerald was investigating storing the cold wallet coins on other exchanges (not a cold wallet, also wtf).
  • Blockchain analysis suggests QuadrigaCX continued to operate without BTC reserves for months, and only could approve BTC withdraws from other customers deposits.
  • Kraken CEO Jesse Powell states: "We have thousands of wallet addresses known to belong to @QuadrigaCoinEx and are investigating the bizarre and, frankly, unbelievable story of the founder's death and lost keys. I'm not normally calling for subpoenas but if @rcmpgrcpolice are looking in to this, contact @krakenfx"
  • Jesse Powell: "As far as I know, a death certificate has been produced by a Canadian funeral home. Who knows if it's legit. We also don't know if there were any witnesses or an autopsy, or whether any authorities in Canada have seen the body and verified identity."
  • Courts approve 30 day bankruptcy protection, the wife does not show up due to "safety concerns"
  • RCMP begins to investigate
  • The wife has a private jet.
Reading the subreddit has been a wild ride. Every day there's something new. https://twitter.com/JackJulian/status/1092807578025902082 (https://archive.vn/7hxMb)
upload_2019-2-5_17-49-45.png
 

Cricket

Evil from Concentrate
True & Honest Fan
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Crypto CEO Dies Holding Only Passwords That Can Unlock Millions in Customer Coins
By
Doug Alexander
February 4, 2019, 12:54 PM EST
  • Without digital keys, clients lose access to coins, funds
  • Board said last week that it was seeking creditor protection
Digital-asset exchange Quadriga CX has a $200 million problem with no obvious solution -- just the latest cautionary tale in the unregulated world of cryptocurrencies.

The online startup can’t retrieve about C$190 million ($145 million) in Bitcoin, Litecoin, Ether and other digital tokens held for its customers, according to court documents filed Jan. 31 in Halifax, Nova Scotia. Nor can Vancouver-based Quadriga CX pay the C$70 million in cash they’re owed.

Access to Quadriga CX’s digital “wallets” -- an application that stores the keys to send and receive cryptocurrencies -- appears to have been lost with the passing of Quadriga CX Chief Executive Officer Gerald Cotten, who died Dec. 9 in India from complications of Crohn’s disease. He was 30.

Cotten was always conscious about security -- the laptop, email addresses and messaging system he used to run the 5-year-old business were encrypted, according to an affidavit from his widow, Jennifer Robertson. He took sole responsibility for the handling of funds and coins and the banking and accounting side of the business and, to avoid being hacked, moved the "majority" of digital coins into cold storage.

His security measures are understandable. Virtual currency exchanges suffered at least five major attacks last year. Japan, home to some of the world’s most active digital-asset exchanges, has also hosted two of the biggest known crypto hacks: the Mt. Gox debacle of 2014 and the theft of nearly $500 million in digital tokens from Coincheck Inc. last January.

Quadriga CX’s directors posted a notice on the firm’s website on Jan. 31 that it was asking the Nova Scotia court for creditor protection while they address “significant financial issues" affecting their ability to serve customers. A hearing is scheduled for Tuesday, and Ernst & Young has been chosen as a proposed monitor.

“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us," the firm said. “Unfortunately, these efforts have not been successful."

As is often the case with crypto, the episode has raised speculation on Reddit’s online forums, where posters are wondering aloud if the business was a scam, calling for class-action lawsuits and even concocting conspiracy theories that call into question whether the CEO is even deceased. The latest online speculation suggests that Quadriga CX funds have been moving -- even though the firm claims they can’t get access.



https://www.bloomberg.com/news/articles/2019-02-04/crypto-exchange-founder-dies-leaves-behind-200-million-problem
 
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