Stories
Slash Boxes
Comments

SoylentNews is people

posted by janrinok on Monday February 04 2019, @07:43PM   Printer-friendly
from the wanted:-one-ouija-board dept.

Arthur T Knackerbracket has found the following story:

A cryptocurrency exchange in Canada has lost control of at least $137 million of its customers' assets following the sudden death of its founder, who was the only person known to have access the the offline wallet that stored the digital coins. British Columbia-based QuadrigaCX is unable to access most or all of another $53 million because it's tied up in disputes with third parties.

The dramatic misstep was reported in a sworn affidavit that was obtained by CoinDesk. The affidavit was filed Thursday by Jennifer Robertson, widow of QuadrigaCX's sole director and officer Gerry Cotten. Robertson testified that Cotten died of Crohn's disease in India in December at the age of 30.

Following standard security practices by many holders of cryptocurrency, QuadrigaCX stored the vast majority of its cryptocurrency holdings in a "cold wallet," meaning a digital wallet that wasn't connected to the Internet. The measure is designed to prevent hacks that regularly drain hot wallets of millions of dollars (Ars has reported on three such thefts here, here, and here.)

Thursday's court filing, however, demonstrates that cold wallets are by no means a surefire way to secure digital coins. Robertson testified that Cotten stored the cold wallet on an encrypted laptop that only he could decrypt. Based on company records, she said the cold wallet stored $180 million in Canadian dollars ($137 million in US dollars), all of which is currently inaccessible to QuadrigaCX and more than 100,000 customers.

"The laptop computer from which Gerry carried out the Companies' business is encrypted, and I do not know the password or recovery key," Robertson wrote. "Despite repeated and diligent searches, I have not been able to find them written down anywhere."

The expert, she added, has already accessed Cotten's personal and work email accounts and is now trying to gain access to an encrypted email account. Cotten also used an encrypted messaging system, but the chances of successfully reading the communications appear dim because, the expert has reported, "messages would disappear from the encrypted messaging system after a short period."

-- submitted from IRC


Original Submission

 
This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (Score: 3, Informative) by Snow on Monday February 04 2019, @08:19PM (10 children)

    by Snow (1601) on Monday February 04 2019, @08:19PM (#796257) Journal

    Kinda sucks... All the evidence so far suggests that if I do get anything back, it will be pennies on the dollar.

    One of the great things about the blockchain is that you can follow the money. Some people have collected a bunch of addresses used to collect and payout funds to and from Quadriga. Based on the initial analysis, it appears as though Quadriga DIDN'T EVEN HAVE A COLD WALLET.

    The initial findings show 'robbing peter to pay paul' type activities where other deposits were rerouted to be used as withdrawals (which in itself is not damning, but combined with the apparent lack of a cold wallet is quite concerning).

    Also, the 'death' of the Geral Cotten is rather odd. He died in India of 'complications from his chron's disease' while setting up an orphanage. That's quite the death story...

    Pray for me SN. Hopefully I get a bit of my money back (I'm not too hopeful though).

    Starting Score:    1  point
    Moderation   +1  
       Informative=1, Total=1
    Extra 'Informative' Modifier   0  
    Karma-Bonus Modifier   +1  

    Total Score:   3  
  • (Score: 0) by Anonymous Coward on Monday February 04 2019, @08:36PM (1 child)

    by Anonymous Coward on Monday February 04 2019, @08:36PM (#796268)

    Your comment makes me wonder... is there a deeper conspiracy going on? It wouldn't be the first time somebody has faked their death to get lots of money (to get out of a debt, or to abscond with money). $137M is a LOT of money, too.

    Is there any way to check if this money gets spent in the future to confirm if there is fraud going on here?

    • (Score: 2) by Snow on Monday February 04 2019, @08:44PM

      by Snow (1601) on Monday February 04 2019, @08:44PM (#796272) Journal

      That was initially the goal of collecting the wallet addresses.

      Take the different payout and deposit addresses, trace them back to a cold storage account and then monitor it for movements. The problem is that no cold storage account could be located.

  • (Score: 0) by Anonymous Coward on Monday February 04 2019, @08:40PM (1 child)

    by Anonymous Coward on Monday February 04 2019, @08:40PM (#796269)

    is there any benefit to these e-wallets?

    • (Score: 1, Funny) by Anonymous Coward on Monday February 04 2019, @08:42PM

      by Anonymous Coward on Monday February 04 2019, @08:42PM (#796271)
      Yes, but only if you intend to lose all the money in that wallet.
  • (Score: 1, Interesting) by Anonymous Coward on Monday February 04 2019, @08:41PM (4 children)

    by Anonymous Coward on Monday February 04 2019, @08:41PM (#796270)
    It is traceable, but every wallet is anonymous and pretty difficult to investigate, unless you are an Interpol officer with this very assignment. Every other LEO structure will do nothing about a problem with a semi-legal financial instrument and uncertain jurisdiction of the supposed crime. Bitcoin is designed to function apart from the government, therefore it's illogical to ask the government to help with Bitcoin.
    • (Score: 2) by Snow on Monday February 04 2019, @08:48PM (3 children)

      by Snow (1601) on Monday February 04 2019, @08:48PM (#796274) Journal

      They also held many millions in CAD and USD. (Or were supposed to...)

      This will almost certainly be investigated by some government agency. Will the crypto site be competently investigated or will the focus be on the CAD/USD side of things?

      • (Score: 0) by Anonymous Coward on Monday February 04 2019, @09:27PM (1 child)

        by Anonymous Coward on Monday February 04 2019, @09:27PM (#796286)

        It will not be investigated. It wasn't a crime, just an accident. In essence, you loaned your money to a private person, and that person died with no records where he hid the money. Even if you prove wrongdoing, getting the money back seems to be impossible. It's actually worse in the case of fraud - the money was hidden specifically from investors. A civil lawsuit against a null company - what is the purpose? The crying widow says she is not involved; and there is nobody else.

        The only real chance to get somewhere is to find the "dead" partner, if he is not dead after all.

        • (Score: 0) by Anonymous Coward on Monday February 04 2019, @11:57PM

          by Anonymous Coward on Monday February 04 2019, @11:57PM (#796362)

          Aren't there bank accounts too?

      • (Score: 2) by FatPhil on Tuesday February 05 2019, @10:54AM

        by FatPhil (863) <pc-soylentNO@SPAMasdf.fi> on Tuesday February 05 2019, @10:54AM (#796591) Homepage
        > They also held many millions in CAD and USD. (Or were supposed to...)

        Are they registered as a bank or equivalent? Because if they aren't, they aren't even a legitimately operating business entity. They'd be a criminal organisation, presumably by design guilty of wire fraud and money laundering. *By design*. And people gave them money why?
        --
        Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
  • (Score: 0) by Anonymous Coward on Monday February 04 2019, @11:18PM

    by Anonymous Coward on Monday February 04 2019, @11:18PM (#796340)

    A fool and his box-top stamps are soon parted.