The controversial cryptocurrency exchange QuadrigaCX is, according to court documents, locked out of millions of dollars worth of crypto it currently owes its customers, as its CEO inexpertly passed away late last year with the keys to access them.
According to Canadian news outlet Globe and Mail, the company’s founder and CEO Gerald Cotton passed away in December from Crohn’s disease, and since then the company has been unable to access over $145 million it reportedly had in cold storage.
This, the exchange’s representatives claim, as Cotton was the only person who had access to the funds held in cold storage. QuadrigaCX has since gone offline, and has posted a notice telling users about the ordeal. It has also filed for creditor protection with a Canadian higher court in Nova Scotia to avoid facing legal action from angry users, which would only “complicate an already difficult situation.”
Cotton’s widow, Jennifer Robertson, filed an affidavit explaining what’s going on:
The laptop computer from which Gerry carried out the Companies' business is encrypted and I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them (the passwords) written down anywhere.
QuadrigaCX reportedly had 115,000 users, to which it owns an estimated CA$ 260 million ($198,000). Reportedly, it only has access to CA $375,000 ($286,000). A filing from Ernst & Young states that it has been “unable to access the cold wallets and/or discovered that the cold wallets contained minimal cryptocurrency units.”
The auditing firm has been appointed as an independent third party to monitor the case. Speaking to Globe and Mail other exchange executives claimed it was unusual for only one person to have access to the company’s funds, as it made him a target.
Cotton’s widow has already hired a security expert to try to hack into Cotton’s machine to get to the funds. To pay back its users, QuadrigaCX is reportedly considering selling some of its technology.
In the meantime the exchange’s users, which were already unable to withdraw their funds because of a legal battle with a Canadian bank, have been complaining on social media, with some asking for proof Cotton has indeed passed away.
Robertson’s affidavit claims that she has now been receiving threats on social media because of the ordeal.