Monday February 04, 2019

QuadrigaCX Founder Dies and Customers Lose Access to Their Crypto Investments

The founder of Canadian cryptocurrency exchange QuadrigaCX, Gerald Cotten, died in early December 2018 and nearly all funds from the exchange are locked away in a password protected cold storage. His widow, Jennifer Robertson says she has no password or recovery key access to the laptop that he used for cold storage. She acknowledges that Mr. Cotten held "sole responsibility for handling the funds and coins." She also said, "Quadriga's inventory of cryptocurrency has become unavailable and some of it may be lost." The crypto exchange allegedly kept accepting deposits from users after learning of Gerald Cotten's death and the loss of access to the cold wallet. $190 million in coins belonging to 115,000 investors are affected by the loss of access to the cold storage. Jennifer Roberson's affidavit can be viewed here.

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Quadriga keeps only a minimal amount of coins on the server (in a hot wallet). The normal procedure was that Gerry would move the majority of the coins to cold storage as a way to protect the coins from hacking or virtual theft. The amount of coin kept on the server versus in cold storage was originally set at a fixed amount. Transfers could happen automatically or manually. The threshold requirement for Quadriga's hot wallet was removed some time ago and, after that, Gerry manually controlled the flow of coins between the hot and cold wallets credited on the Quadriga platform.