Canadian crypto exchange QuadrigaCX’s funds locked after founder dies

Canadian crypto exchange QuadrigaCX cannot access nearly $200 million worth of customer funds after its founder Gerald Cotten passed away in December.

Cotten died on December 09, 2018 in India due to complications from Crohn’s disease. According to a court filing viewed by CoinDesk, the exchange owes around $250 million CAD (approximately $190 million USD) to nearly 115,000 customers in both cryptocurrency and fiat.

Quadriga CX holds around 26,500 bitcoin ($92.3 million USD), 11,000 bitcoin cash ($1.3 million), 11,000 bitcoin cash SV ($707,000), 35,000 bitcoin gold ($352,000), nearly 200,000 litecoin ($6.5 million) and about 430,000 ether ($46 million), which totals to $147 million.

In a sworn affidavit filed with the Nova Scotia Supreme Court late last month, Cotten’s widow Jennifer Robertson said that Cotten moved the majority of cryptos into cold storage in a bid to circumvent hacks. However, it remains uncertain as to exactly how much of its crypto holdings are in the hot and cold wallets.

Robertson said that she could not find Cotten’s passwords, which means that customer funds held by the exchange in these wallets are now locked.

"After Gerry’s death, Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost," Bloomberg quoted Robertson, who added that the company’s access to currency has been "severely compromised".

This has also been confirmed by the company’s board of directors who said, “Gerry took sole responsibility for the handling of funds for QuadrigaCX and as such no one other than him can access the coins in the cold wallets.”

The exchange had filed for creditor protection to help resolve the financial problems and preserve the interests of our customers, according to the message.

“With this filing, the Court has appointed a monitor, Ernst & Young Inc., an independent third party to oversee these proceedings as we make every effort to address our customer obligations. Filing for creditor protection allows us to work diligently through the process, and to try ensure the viability of our company,” QuadrigaCX said.

Furthermore, the company has hired outside consultants to access cold wallets and was able to access “a few coins, but not many.”