The case of the infamous Bitcoin (BTC) exchange QuadrigaCX continues to get more and more bizarre. As per recent developments regarding the matter, on February 12, EY (Ernst and Young), the monitor of the issue with QuadrigaCX, released its first report to the Nova Scotia Supreme Court. In the report submitted by EY, QuadrigaCX moved no less than $370,800 equivalent of Bitcoin (BTC) to a cold wallet owned by deceased CEO Gerald Cotten. Cotten’s death has since caused a stir in the space with many in the sector claiming his death was faked.
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What the Monitor Had to Say Regarding the QuadrigaCX Saga
According to the monitor’s report issued to the Nova Scotia Supreme Court:
“On February 6, Quadriga transferred 103 BTC valued at $468,675 to cold wallets owned by the deceased CEO that the Company is unable to access currently. We are working with management to ensure the retrieval of the digital assets from the various cold wallets as quickly as possible.”
In the last few weeks many reports about QuadrigaCX, the company whose CEO died with the private keys to the exchange’s cold wallets containing a vast amount of user funds. Now, this is the latest in the saga.
What Happens to the User Bitcoin (BTC) Holdings?
If QuadrigaCX CEO passed away and access to the exchange’s cold wallets can’t be restored, the $370,800 equivalent of Bitcoin (BTC) “inadvertently” transferred to the cold wallet can’t be recovered.
Hence, for now, it is safe to say the company and its creditors can only access to QuadrigaCX’s hot wallets. But, the monitor disclosed that QuadrigaCX’s hot wallets have below $1 million in them, which isn’t enough to refund users who the exchange reportedly owe $150 million. According to EY:
“The Monitor was reportedly advised that Quadriga held Canadian currency equivalent to the tune of $902,743 in its hot wallets as at the date this document was filed.”
Whether the assets were held in a hot wallet or cold wallet, major exchanges typically implement additional measures to make sure user funds are transferred to the correct address.
Sending the $370,800 equivalent of Bitcoin (BTC) from a hot wallet to cold wallet that the exchange knows can’t be accessed is the same thing as a company sending enormous amounts of money to the wrong bank account that the company has no control over which rarely occurs.
QuadrigaCX Saga May Continue for Longer Than Anticipated
We can recall from an initial report by The Wall Street Journal, that the legitimacy of the explanation given by the exchange regarding the loss of nearly $190 million in funds was boosted as independent researchers couldn’t find enough evidence to authenticate the existence of any cold wallets owned by QuadrigaCX.
In its report, the monitor said it is attempting to gain access to the cold wallets that allegedly exist, which in essence suggests that any wallets that can be regarded as cold wallets haven’t yet been found.
According to the monitor:
“The Monitor and the Applicants will continue in their efforts to gain access to Cotten’s devices, to find if any Quadriga cold wallets exist, and locate any crypto belonging to QuadrigaCX before reporting back to the Supreme Court.”