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Digital Exchange Loses $137 Million As Founder Takes Passwords To the Grave (arstechnica.com)
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 to 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. Ars Technica reports: 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. 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 mismanaged cold wallet is only one of the problems besieging QuadrigaCX. Differences with at least three third-party partners has tied up most or all of an additional $53 million in assets. Making matters worse, many QuadrigaCX customers continued to make automatic transfers into the service following Cotten's death. On Monday, the site became inaccessible with little explanation, except for this status update, which was later taken down. On Thursday, QuadrigaCX said it would file for creditor protection as it worked to regain control of its assets. As of Thursday, the site had 115,000 customers with outstanding balances.
The mismanaged cold wallet is only one of the problems besieging QuadrigaCX. Differences with at least three third-party partners has tied up most or all of an additional $53 million in assets. Making matters worse, many QuadrigaCX customers continued to make automatic transfers into the service following Cotten's death. On Monday, the site became inaccessible with little explanation, except for this status update, which was later taken down. On Thursday, QuadrigaCX said it would file for creditor protection as it worked to regain control of its assets. As of Thursday, the site had 115,000 customers with outstanding balances.
and nothing of actual worth was lost
This is why well established insured banking establishments are used. But hey, it was your money - do what you want with it, they didn't!
... requires sacrifice.
Obviously, these people have never heard of Business Continuity Management. Fits however nicely with the "greed and stupidity FIRST" mindset of the cryptocurrency community. This is hilarious!
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
You can't take it with you, but I guess he did.
$137 million, and they didn't think to store the password somewhere it wouldn't be lost? They didn't think to ask the guy before he died? What a stupid company.
Did he actually die...?
Just think about the implications of $137mil of untraceable funds that aren't strictly controlled by any national regulations.
--Brandon / Split Infinity Music
HA HA!
You would think it would be worth it to brute force the password for that much money.
My UID is prime and so is this number: 09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0.
Sounds like a sure bet. To whom may I send my money? I have it burning a hole in my pockets. I need bitscoin to be ready for the new world order. May I be assisted by you dear sir or madam?
Maybe he has a dead man's switch active on his account, and it hasn't yet noticed that he's dead.
I guess this is what you get. It sounds like everything was stored on a laptop as well, so even if he didn't die but just had the laptop lost/stolen/destroyed/etc. then the data was gone too. Since crypto-currency is nothing but data, poof goes your equity. Assuming of course that this whole story isn't just about a scam where he didn't really die but is on a yacht somewhere in the Mediterranean instead.
and his money are soon parted.
Sudden death from Crohn's disease in India, one of the easiest places on earth to fake your death?
and that would be the one with the backup copy, which nobody knows about for obvious reasons.
HA-HA!
... the guy who died without a password post-it in his safety deposit box or people that converted their actual cash into imaginary money and trusted it to some random 30 year-old with a laptop. I'd posit that the customers got what was coming to them.
I don't know who coined this term, but given the very expensive rookie mistakes I keep seeing, not to mention the claims of security that keep falling apart, the term "Dunning-Krugerrand" for BitCoin seems apt.
Finding God in a Dog
This keeps happening, some people just hate having money so they put it into money shredders like bitcoin. I just hope someone finds a critical hole in the bitcoin protocol and kills the whole thing already.
One would think these blockchain wizzes would have chosen a way to share such an important secret amongst a trusted group for situations ike this.
It's certainly a cunning plan, worthy of the great Baldrick himself! A single laptop and only one person knows the password, that man has a chronic disease and is travelling in a third world country *facepalm*
I'm not proud to say that one of the things I find most satisfying is watching anti-establishment types painfully discover why the establishment exists.
Yep, this is why we have real banks, dummies.
Their customers who are out the money are such geniuses for avoiding central banks and pesky things like deposit insurance. I really can't feel sorry for anyone who loses money when things like this happen, they're victims of their own ignorance.
Since that BTC is now lost forever, this means the remaining pool of accessible BTC is even more valuable. Oh, the joys of a deflationary currency!
Everyone holding BTC just got wealthier. So get to it, and start figuring out how to sabotage the wallets of everyone else, and you will eventually be the richest person on earth. (Cue the dramatic music.)
If it was me, I would use a "deadhand switch" to send a email to my lawyer and month or so after my death.
I can spend USD $50 and have a fully-functional and registered India passport. I have two right fucking now.
$l37Mi11ioN
If they can convince someone to loan them the money until Moore's Law has gone through enough iterations that the key can be recovered, and perhaps use their hot storage crypto as a transactional cache, then could they be unfucked?
If the only places the private keys for the cold storage existed was on his LAPTOP, an easily-stolen, destructible thing, then holy shit what an idiot.
“Despite repeated and diligent searches, I have not been able to find them written down anywhere. I am forced to proceed to the next stage of the recovery plan - spending long periods at numerous luxury villas around the globe, tirelessly searching for the location of that elusive password! Do not despair... I will not halt my efforts, no matter how many decades it may take, until your funds are completely spent. I mean RECOVERED. Yes, recovered is the word I was looking for.“
#DeleteChrome
Charon now accepts Bitcoin, though $137M seems a bit stiff for a ferry ride -- let's face it, cryptocurrency people are probably all going to Hell...
It must have been something you assimilated. . . .
People are saying that this "convenient" "stupidity" as you call it is simply an attempt to defraud their customers.
Violence is the last refuge of the incompetent. Polar Scope Align for iOS
Ooooh - bad way to go.
via the u.s. i'm sure the feds would love to 'lose' it during routine inspection.
"Thursday's court filing, however, demonstrates that cold wallets are by no means a surefire way to secure digital coins."
Time will tell, but this seems pretty good way to assure they are secure. Probably guaranteed. If that address records transfers, then we have an issue. The security issue is the idiots that allow transfers to be made by a third party (and allow them to stagnate there).
Excuse my ignorance but isn't elimination of a third party to facilitate transfer a major reason to record your own transfers on the blockchain? Why trust others to verify trust, because you're too lazy? Short resources? Stupid?
If you're trading on someone's market there's absolutely no reason not to be fully settled ASAP. Or find a better market.
09 F9 11 02 9D 74 E3 5B - D8 41 56 C5 63 56 88 C0 45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
Nice whoosh porn: the inscrutable superposition of a bag of hammers with an gloating, goateed hipster.
Interestingly, it made think just enough to realize that the limited supply of gold is not nearly a sufficient condition: gold must itself be limited, but also gold-like things must also be limited. What cryptocurrencies have done is to make the category of gold-like things inexhaustible. Want a new limited-supply currency? Not a problem: there's an IPO at every Starbucks (or there was, until IPO exhaustion).
We're presently living through a gold-like-thing rush.
I think what we're looking at here is Marx's vaunted network effect: those who hold power and wealth are automatically a shrinking group. So the real reason crytocurrency is conceptually in short supply is because ultimately only one crytocurrency can rule the roost (the impostor half-calf almond-milk latte-coin is sure to finally fade away). When there remains One True Coin of finite supply, we will truly have our limited gold replacement (now tradable anonymously over a wire).
Meanwhile, some people seem to (wishfully) believe that any finite number k of finite crytocurrencies are conceptually still a finite supply (yet also somehow an unlimited finite supply). We await the exponential network-effect event horizon to somehow permanently constrain k to a value ranging from 1 to 3 (the network, plus the alternative network, plus an optional the wannabe network—which sometimes merges into #1 or #2 and then sprouts a new head).
How one conceptualizes the disappearance of a hundred million dollars of BTC entirely depends on how one conceptualizes the future boundary condition: will coinspace become functionally finite, and if it does, will BTC be one of the surviving coins, and does this kind of nasty story about BTC value destruction (for the actually coin holders) have anything to say about the probability that BTC itself survives???
A 1% decline in the perceived BTC endgame survivorship function could wipe out $100 million of perceived equity all by itself (much the way the general relativity is entirely defined by differential quantities under coordinate transformation—deriving non-differential quantities from the finished theory is mainly left as an exercise for the motivated reader—perceived value rules cybermath).
One thing about gold: you couldn't just pick up and squeeze another isotope or another isomer into the periodic table, and then the next day open up a new mine in South Africa to mint this isomer in droves (until the carefully architected day comes to pass where your mine runs dry and there's no more— which was your main story about why anyone should have desired to possess your half-calf almond-milk isogold in the first place).
Or was he smart enough to fake his death and walk away with $137M?
We just dodged a bullet. Let's keep insured institutions out of this please.
How many more idiots are going to lose vast sums of money in these retarded schemes?
Sounds like a multi-cluster fuck
Because India is the perfect place to go when you have any sort of intestinal ailment?
I don't think it means what you think it means.
Don't fight for your country, if your country does not fight for you.
As a limited supply crypto reaches its supply cap, and wallets get lost, can anybody draw a graph of how long it will take before either there's no more crypto in circulation (it's all locked up in forgotten wallets) or what is left is deemed pointless?
"Everybody's naked underneath" -- The Doctor
If it was me, I would use a "deadhand switch" to send a email to my lawyer and month or so after my death.
If it was me I would've gone somewhere to fake my own death and then do a runner with the cash.
Wanna buy a shirt?
https://www.redbubble.com/people/stealthfinger/shop?asc=u
Only solution to these kind of jokes is standardized threshold crypto. They are working on this...
A year or two ago I was looking into doing some Bitcoin trading and QuadrigaCX was well reviewed and recommended by a couple of Bitcoin sites. I looked into it, even signed up for an account, but never put any money into the experience. It just didn't feel right for some reason. And now I'm glad I dodged that bullet. I was a PayPal transfer away from having money in that exchange and it turns out the whole thing was at the mercy of one person with secret credentials.
Crypto currency advocates make gold bugs look sane by comparison. At least with gold, there would be something left behind.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
When business is disrupted, it can cost money. Lost revenues plus extra expenses means reduced profits. Insurance does not cover all costs and cannot replace customers that defect to the competition. A business continuity plan to continue business is essential. Development of a business continuity plan includes four steps:
Conduct a business impact analysis to identify time-sensitive or critical business functions and processes and the resources that support them.
Identify, document, and implement to recover critical business functions and processes.
Organize a business continuity team and compile a business continuity plan to manage a business disruption.
Conduct training for the business continuity team and testing and exercises to evaluate recovery strategies and the plan.
Pa$$word
And expensive graphics cards for a lot of people.
The currency is now truly encrypted.
WTF Why was his entire savings in crypo and why in 1 uninsured exchange!?!?! Crypto is too unable for me to consider even 10% of my assets let alone this much..