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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.
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!
$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.
or she gots the wallet and now everyone else is on a wild goose chase... how can anyone prove otherwise, including her.
And will any of us be as sorely missed as he? Probably not.
Well, it could have been worse. The money could all have been stolen. At least this way they know where it is. In a sense, it is still perfectly secure, too...
See, now this is the thing. Crohn's disease doesn't kill you. I have it, and as you can imagine I looked into what it does that will eventually kill you. It doesn't.
Since it's an autoimmune disease, however, you need to take two kinds of meds to deal with it:
Anti-immune drugs
Anti-inflamatory drugs
Unless he had a severe reaction to either, the main killer of a crohn's sufferer is infection due to lowered immune system. While this definitely is dangerous, like diabetic patients it is drummed into you that if you get ANY kind of infection, you go straight to hospital to have it dealt with.
If the person died, they died of stupidity (either their own or whatever doctor they ran to not taking it seriously enough), but they didn't die of crohn's disease.
...
The only real mystery is how he survived this long with such a huge target hanging around his neck.
Well, it is probably not that hard to get an official death certificate in India while still alive.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
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
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.
Well, it could have been worse. The money could all have been stolen. At least this way they know where it is. In a sense, it is still perfectly secure, too...
And it's perfectly safe because the only copy is stored on a laptop.
It most surely *can* kill you.. True, it can usually be managed if you *know* what it is... However, not everybody who has it, knows what it is and is being properly treated for it.
And yes, I have experience with this. My Mother in law has Crohn's and she very nearly died from it. They mis-diagnosed the problem and her gut leaked for days until they opened her up to take a look. She lost the majority of her small intestines, all of her colon and spent nearly a year in the hospital, half in a coma in intensive care. She now must be given IV fluids every other day and can barely get enough nutrition to stay alive eating.
It was woefully managed by her doctors, but Crohn's all but killed her.
So I'm not as ready to dismiss this story as impossible. It most assuredly IS possible.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
Likely easier than after you're dead. Bribes don't pay themselves.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
“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
What on Earth could possibly make you think crypto is untraceable? The whole point of a PUBLIC blockchain is literally the opposite.
And it's perfectly safe because the only copy is stored on a laptop.
Where the money is located is on the blockchain that's distributed for the whole world to see. They can point to it and say here's our cold wallet with the $137 million that we lost the key to. It wouldn't bring the money back but it would prove nobody else took it as part of a scam. Now if they say we don't know where the cold wallet is and that information was only on the laptop too then I'm thinking exit scam.
Live today, because you never know what tomorrow brings
Fair point. But I imagine it doesn't "suddenly" kill. I had symptoms of crohn's disease for six months before the anal bleeding actually started (that's kinda a good wakeup call). My doctor had it diagnosed within a week (colonoscopy) and had me on powerful anti-inflammatory drugs, anti-immune drugs, and antibiotics.
The immune inhibitors suck ass pretty badly, but not as much as the pain when you're not on them.
I guess I should have included a statement that "sudden" death from crohn's doesn't happen, and death from it is unheard of if it is being managed properly.
...
Did he actually die...?
Just think about the implications of $137mil of untraceable funds that aren't strictly controlled by any national regulations.
It seems a bit suspicious:
As many as 115,000 account holders are owed $250 million, which is locked up in “cold storage” only accessible to the recently deceased founder and CEO, Gerald Cotten
At the time of the bankruptcy filing, QuadrigaCX held 26,500 Bitcoin worth $120 million, 430,000 Ether worth $60 million and several million dollars worth of Bitcoin Cash SV, Bitcoin Gold, and Litecoin, according to court documents.
QuadrigaCX’s troubles started early last year when CIBC froze accounts affecting 388 customers worth $28 million, citing confusion about ownership of those funds. Those funds were finally released by an Ontario court in December, according to a statement from QuadrigaCX.
Just days later, Jennifer Robertson announced that her husband Gerald Cotten, 30, had died of complications due to Crohn’s disease in India on Dec. 9, while opening an orphanage.
So already we seem to be looking at a gap of 250 - (120 + 60 ( +28 ? ) ) either 30 or 60 million if I'm reading properly, and then in the midst of these legal issues he's off in India opening an orphanage when he suddenly dies.
Then again this shouldn't be a subject of debate. It's not the 1800s, if someone dies in India the body is repatriated as a standard practice.
If there's a body it's trivial to confirm it's him and it lays some really ugly speculation to rest. If there's no body then a new batch of questions pop up.
Btw, I'm guessing the identity of those "lost" coins are known, if he were faking I don't think he'd be able to dip very far into that bank before people figured out what was happening.
I stole this Sig
You can't recoop money, only chickens.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
how can anyone prove otherwise
Maybe if Bitcoin had some sort of public ledger we can establish if anyone ever accessed the funds... It's a shame they didn't implement such a feature.
Indeed. In fact, there's some evidence that coins are being transferred out of some of the "cold" wallets. https://cointelegraph.com/news...
If they both disappear at the same time, it's an obvious scam and scrutiny will be intense. Either they are waiting for the heat to die down before she joins him or like you said, she's just a patsy in all this.
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