The cryptocurrency exchange QuadrigaCX owes its customers $250 million in Canadian dollars. Unfortunately, the exchange can’t access any of the funds because its leader is dead and no one knows the passwords to his computers.
A Canadian cryptocurrency exchange can no longer access customer funds because the company’s CEO is dead and no one knows the passwords to his computers.
The computers hold more than US$137 million in virtual currencies for the cryptocurrency exchange QuadrigaCX. However the company’s founder and CEO Gerald Cotton unexpectedly died in India this past December from Crohn’s disease.
The exchange has now gone offline. On Thursday, QuadrigaCX posted a notice telling customers it had lost access to the cryptocurrency reserves and filed for creditor protection with a Canadian higher court in Nova Scotia.
On the same day, Cotton’s widow, Jennifer Robertson, filed an affidavit with the court explaining the reasons behind the missing funds.
“The laptop computer from which Gerry carried out the Companies’ business is encrypted and I do not know the password or recovery key,” she said in the affidavit, which was obtained by CoinDesk. “Despite repeated and diligent searches, I have not been able to find them (the passwords) written down anywhere.”
So far, only the cryptocurrency stored on QuadrigaCX’s online server has been retrieved. But the bulk of the funds, located in offline computers dubbed “cold wallets,” remain locked away. Cotton did this to keep the cryptocurrency secure from hacks, but he failed to tell anyone else with the exchange his passwords.
QuadrigaCX is now seeking creditors protection from the court so it can avoid facing immediate legal action from angry customers. At this point, a lawsuit would “only serve to complicate an already difficult situation,” Robertson’s affidavit says.
The exchange had about 115,000 users who held balances on the exchange. Collectively, it owes them about $250 million in Canadian dollars (US$190 million). According to the affidavit, QuadrigaCX held 26,488 coins in Bitcoin, 199,888 in Litecoin, and 429,966 in Ethereum.
Cotton’s widow has hired an outside security expert to try and hack the computers. The exchange’s current management is also looking at selling the platform’s technology to get the funds to compensate customers. In the meantime, QuadrigaCX users have been complaining on Reddit, and demanding evidence that proves Cotton is indeed dead.