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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


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  • (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?

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  • (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?
    --
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