Almost $400,000 in Crypto Inaccessible, QuadrigaCX's Management Claims

QuadrigaCX, a controversial Canadian crypto exchange that owes its customers $190 million in digital assets and fiat currency, has reportedly lost an additional $500,000 CAD (appr. $378,495).

As noted in a preliminary audit report (released on February 12th), QuadrigaCX’s management claims to have accidentally transferred over 100 bitcoins (BTC) to a cold storage wallet - which is reportedly inaccessible.

103 Bitcoin Accidentally Transferred To Inaccessible Wallets

After the troubled exchange filed for creditor protection last month, “Big Four” auditing and professional services firm, Ernst & Young (EY) was appointed (by the courts) to serve as QuadrigaCX’s monitor. As mentioned in the report prepared by EY:

On February 6, 2019, QuadrigaCX inadvertently transferred 103 bitcoins valued at approximately $468,675 to QuadrigaCX cold wallets which the Company is currently unable to access. The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.

Previously, QuadrigaCX had claimed it was unable to access user and company funds stored in its cold wallets, because the exchange’s CEO, Gerald Cotten, had passed away while on a trip to India. According to the Canadian crypto trading platform, Cotten was the only one who had access to the private keys associated with over $190 million in customers’ cryptoassets.

As stated in the report, EY will be managing QuadrigaCX’s remaining funds - which are currently stored in hot wallets. EY will reportedly transfer the exchange’s assets to its own cold wallets. The remaining funds reportedly include 51 bitcoins, 33 bitcoin cash (BCH), 2,000 bitcoin gold (BTG), 0.014 bitcoin SV, 950 ether (ETH), and 800 litecoin (LTC).

EY To Manage Exchange's Assets & Try To Recover Lost Funds

EY has also taken custody of “various QuadrigaCX electronic devices reportedly owned or used by [former company CEO Gerald] Cotten within the QuadrigaCX operation,” - which includes three encrypted USD keys, four laptop computers, and four mobile phones. At present, the confiscated devices are being held in EY’s safety deposit box - until the auditing firm’s forensic group completes its investigation and attempts to recover the lost funds.

In order to recover the large amount of cryptocurrency, EY said it had hired several payment processors. These third-parties are currently working with EY to gain access to QuadrigaCX’s fiat and crypto balances. According to EY, it has not been able to make any substantive progress while trying to recover the inaccessible digital assets.

In a previous court filing, the troubled exchange confirmed that it owes its customers $180 million CAD (appr. $137 million) worth of digital assets. However, QuadrigaCX has not disclosed the crypto wallet addresses that are holding the funds.