TL;DR: The Supreme Court of Nova Scotia, Canada, released a third report, 50 pages of findings on efforts to recover funds from cryptocurrency exchange QuadrigaCX. The CEO reportedly died in India, supposedly taking with him keys to cold wallets containing millions in users’ money. Hope emerged when the man’s laptop was cracked, revealing wallets and their contents. Instead, “the remaining bitcoin in the Identified Bitcoin Cold Wallets was transferred out bringing the balances down to nil,” court records noted.
QuadrigaCX Wallets Opened, Money’s Gone
The drama just won’t cease when it comes to the curious case of a large cryptocurrency exchange, once thought very highly of within the ecosystem. It’s quickly becoming yet another cautionary tale about trusting third parties and controlling one’s cryptocurrency through keys. Not your keys, not your money, the mantra goes.
Gerald Cotten, founder and CEO of QuadrigaCX, was newly married and, as is maybe par for the course, arranged his affairs through a Will just weeks before his untimely death, complete with excruciating details about even how his dogs were to be looked after. Allegedly, he was on a honeymoon of service, traveling to India on a mission of mercy when disaster struck and he died of natural causes.
Something on the order of more than $135 million in crypto from about 115,000 exchange users were locked in offline, cold wallets — the passphrases’ whereabouts only known to Cotten. Court security experts eventually found and cracked Mr. Cotten’s laptop some weeks later, finding cold wallets.
On pages 19 and 20 of the court’s findings, it appears from 2014 Cotten’s wallets ranged in balances from zero to 2,776 bitcoin, with an average of 124. “In April 2018, the remaining bitcoin,” the court report detailed, “in the Identified Bitcoin Cold Wallets was transferred out bringing the balances down to nil,” suggesting precious few deposits since have been made.
In fact, after April of last year, a “Sixth Wallet appears to have been used to receive bitcoin from another cryptocurrency exchange account and subsequently transfer the bitcoin to the
Quadriga hot wallet. As of the date of the Third Report, the Sixth Wallet contains no cryptocurrency. The last transaction from the Sixth Wallet was initiated on December 3, 2018,” close to Cotten’s death.
Furthermore, “Certain of the bitcoin in the Identified Bitcoin Cold Wallets appear to have been transferred to accounts at other cryptocurrency exchanges,” the court explained, and also revealed “it is not possible to ascertain with absolute certainty from public
information who the owner of an address is, however, the tools and sources utilized
by the Monitor indicate that certain receiving wallet addresses from transactions in
the Identified Bitcoin Cold Wallets are wallet addresses associated with identifiable
The court has “reached out to various cryptocurrency exchanges to identify possible accounts controlled by Quadriga or Mr. Cotten and receive transactional information in respect of any such accounts.” Officials have also reportedly “made inquiries of the Applicants as to the reason for the lack of cryptocurrency reserves in the Identified Bitcoin Cold Wallets since April 2018. To date, the Applicants have been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Cold Wallets for deposits in April 2018,” the court insisted.
CONTINUE THE SPICE and check out our piping hot VIDEOS. Our podcast, The CoinSpice Podcast, has amazing guests. Follow CoinSpice on Twitter. Join our Telegram feed to make sure you never miss a post. Drop some BCH at the merch shop — we’ve got some spicy shirts for men and women. Don’t forget to help spread the word about CoinSpice on social media.