The largest digital currency trading platform in Canada – QuadrigaCX – is currently in a very ugly situation. The digital currency trading platform recently announced that it could no longer find digital currency wallets holding digital currencies worth $190 million. The digital currencies are stored in the cold storage wallets of the exchange, and they have lost access to the wallets.
$190 million in Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), and Bitcoin Gold were lost. This was revealed in an affidavit filed on the 31 of January with the Supreme Court of Nova Scotia.
How Did QuadrigaCX Loss Access to Its Cold Storage Wallets
The affidavit, which was obtained initially by CoinDesk, was filed by Jennifer Robertson, the widow of the CEO of Gerald Cotten and the founder of QuadrigaCX. The death certificate attached to the affidavit revealed that Cotton died in India after suffering from Crohn’s disease. The trading platform disclosed the Gerald Cotten earlier this year.
According to Jennifer Robertson, Cotten was solely in charge of storing the funds of users in cold storage wallets. A cold storage wallet is a digital currency wallet that is not connected to the internet and stored offline. Top digital currency trading platforms such as Coinbase and Binance usually store a significant percentage of their funds in cold storage to prevent security breaches and hacking attacks.
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Nevertheless, there is usually a structure in place like a multi-signature system to make sure the trading platform can still pull out funds under the most unlikely situations. In the case of QuadrigaCX, the CEO and founder of the firm was the only one responsible for the funds. Since he is no longer alive, the funds he previously maintained could no longer be accessed by anyone.
She has hired a consultant to decrypt the laptop used by the CEO to possibly gain access to the private keys to the cold storage wallets that contain the funds of users on the trading platform. The consultant has not been able to gain access to the laptop. At the time of writing, the trading platform has not been able to recover any of the funds that were lost.
What If They Are Not Able To Recover the Funds?
According to a report by CCN on the 1st of February, the digital currency trading platform has been struggling to recover the funds stored in the digital currency wallets and also cash store by a third party.
In a statement, the company said: “For the past weeks, we have worked tirelessly to address our liquidity problems, which include attempting to locate and secure our very significant digital currency reserves held in cold wallets, and that is required to satisfy customer digital currency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us. Unfortunately, these efforts have not been successful.”
At the moment, the trading platform has asked for a stay in proceedings that protects the company from potential class action lawsuits that investors on the platform may file. If the firm fails to recover the funds of users, Robertson said that the company would consider selling the business in order to reimburse users with the acquired capital. The trading platform has received a lot of offers already.