QuadrigaCX Crypto Exchange

Canada’s largest Bitcoin and crypto exchange, QuadrigaCX, has lost US$190 million worth of cryptocurrency after losing access to its cold storage wallets. A January 31, 2019, affidavit filed with the Supreme Court of Nova Scotia showed that the crypto exchange has lost US$190 million worth cryptocurrencies (including Bitcoin Core, Ethereum, Litecoin, Bitcoin Cash, Bitcoin Cash SV, and Bitcoin Gold).

How did QuadrigaCX Crypto Exchange lose all its Cryptocurrency Funds?

The news of losing US$190 million worth cryptocurrencies by the largest Bitcoin exchange of Canada came to light when an affidavit was filed by Jennifer Robertson (the widow of Gerald Cotten, the Founder and CEO of QuadrigaCX) in the Nova Scotia Supreme Court. The affidavit revealed that cryptocurrency’s CEO passed away due to Crohn’s disease in India and the entire control of the cold storage wallets (holding all the user funds of the concerned exchange) was with Gerald Cotton.

Cold storage wallets are specialized digital wallets that don’t need internet. Therefore, the crypto funds are stored in cold storage wallets so that they can be stored offline and out of the clutches of the hackers. Most leading cryptocurrency exchanges including Coinbase and Binance store crypto funds in cold wallets to keep funds away from hackers. However, they generally use the multi-signature system so that funds can be withdrawn in any circumstance.

QuadrigaCX Crypto Exchange (2)

However, the multi-signature system was not maintained by QuadrigaCX exchange’s CEO Gerald Cotten. Once he died, all the login credentials of the cold wallet in which the crypto funds were stored got lost. The company said in a statement:

“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us. Unfortunately, these efforts have not been successful.”

Will the Crypto Traders Lose Everything?

Jennifer Robertson, the widow of QuadrigaCX CEO Gerald Cotten, said that if the company fails to recover the funds from the cold wallet, they will sell the business and compensate the investors on the platform.

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