QuadrigaCX, the largest bitcoin exchange in Canada, has claimed to have lost CAD 190 million (nearly USD 145 million) worth of cryptocurrency after the exchange lost access to its cold (offline) storage wallets.
Reason? Unfortunately, the only person with access to the company’s offline wallet, founder of the cryptocurrency exchange, is dead.
Following the sudden death of Gerry Cotten, founder and chief executive officer QuadrigaCX, the Canadian exchange this week filed for legal protection from creditors in the Nova Scotia Supreme Court until it locates and secures access to the lost funds.
In a sworn affidavit filed by Cotten's widow Jennifer Robertson and obtained by Coindesk, Robertson said QuadrigaCX owes its customers some CAD 260 million (USD 198 Million) in both cryptocurrencies, including Bitcoin, Bitcoin Cash, Litecoin, and Ethereum, as well as fiat money.
However, Robertson said the cryptocurrency exchange only has smaller amount in a 'hot wallet' (USD 286,000), claiming that to protect its users funds from hackers, majority of coins were kept in a 'cold wallet'—a physical device that is not connected to the internet—by Cotten, who died of Crohn's disease on December 9 in Jaipur, India.
According to the affidavit, the exchange's offline wallet holds roughly:
- 26,500 Bitcoin (USD 92.3 million)
- 11,000 Bitcoin Cash (USD 1.3 million)
- 11,000 Bitcoin Cash SV (USD 707,000)
- 35,000 Bitcoin Gold (USD 352,000)
- 200,000 Litecoin (USD 6.5 million)
- 430,000 Ether (USD 46 million)
Exit Scam? Researchers Believe QuadrigaCX Never Had $100 Million
Some users and researchers have been doubtful of the exchange's claims, with a leading cryptocurrency researcher, claiming that QuadrigaCX never had access to such a pool of funds and probably lying about having cold wallet reserves, suggesting the incident could be an exit scam.