QuadrigaCX, a Canadian cryptocurrency exchange, finds itself in a dilemma after the death of its 30-year-old founder Gerald Cotten. The founder was the only person who had the passwords to the exchange’s cold storage. This means that about $190 million in client holdings that the exchange has may be gone forever.
Cotten had died unexpectedly in India in December and his widow Jennifer Robertson has said in a sworn affidavit that the exchange owes almost $190 million to its customers in both cryptocurrency and fiat money. The exchange has now filed for creditor protection as it can’t access the funds which were kept in cold storage for safekeeping. It only has access to a much smaller amount that was kept in a hot wallet for use in transfers.
No business records have been left behind by the deceased. His widow does have Cotten’s laptop in her possession but she doesn’t have the password. A technical expert was hired by the exchange to bypass the encryption but that didn’t help either. The affidavit mentions that Cotten held the “sole responsibility for handling the funds and coins,” so no passwords for the cold storage were shared with the team and as such, they’re helpless now.
However, some have voiced concerns that perhaps the death in India has been faked as part of an elaborate exit scam to take off with clients’ holdings, but the court filings made by Robertson include a death certificate and the government has confirmed that a Canadian had died in India, but it did not provide the specifics due to privacy laws.
That being said, in the event that the company fails to recover user funds, Robertson said in the affidavit that the firm would consider selling the business to reimburse users with the acquisition capital. The exchange has received several offers already.