Cryptocurrency exchange loses $145 million after CEO takes passwords to the grave
In brief: Cryptocurrency exchange QuadrigaCX’s 115,000 customers have lost a combined total of $145 million, after CEO and founder Gerald Cotton unfortunately passed away from complications caused by Crohn’s Disease last year. The company has less than half a million left in cash.
A common practice among cryptocurrency exchanges is to store customers’ coins in cold wallets, which are offline and encrypted and can only be accessed by those who know the password. This protects them from hacking and virtual theft but does mean that the entire value of the wallet rests in the hands of those with the password.
An affidavit filed by QuadrigaCX on January 31 reveals that there are 26,500 bitcoins ($92 million), 11,00 bitcoin cash ($1.3 million), 11,000 bitcoin cash SV ($707,000), 35,000 bitcoin gold ($352,000), 200,000 litecoin ($6.5 million) and 430,000 ether ($46 million) stored on Cotton’s encrypted and inaccessible laptop.
While the company has hired several security researchers (read: hackers) to attempt to access the laptop, they’ve had very little success so far. The company’s stance has gone from “Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost” to “most, if not all” of their customers will suffer damages.
To try and buy time to access the laptop and possibly to liquidate the company, QuadrigaCX has applied for a stay of proceedings from the Supreme Court. Ideally, it could let them access around $50 million or so that is currently trapped in a legal battle with a Canadian bank, though a good portion of that money is their customers’, too.
Since it’s leaked out that customers may not get their money back, many have taken to Reddit and Twitter to request proof of death and expressing their anger that the money was so mismanaged. QuadrigaCX employees have admitted that they’re even receiving death threats.