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QuadrigaCX

QuadrigaCX Sends All Its Ether and Bitcoin to Ernst & Young Auditor

When QuadrigaCX’s founder Gerald Cotten died last month, he took the private keys to Quadriga’s cold storage wallets with him.

The founder and CEO died from Crohn’s disease in December 2018. He was the only individual to know the private keys that could access $136 million USD in cryptocurrencies stored offline.

QuadrigaCX Creditor Protection

After the fact, the exchange was granted creditor protection by The Supreme Court of Nova Scotia. This meant it could take some time to try and recover the missing cryptocurrencies. It was also going to try to recoup its losses by unlocking a further $53 million USD in fiat currency held by payment processors.

According to CoinDesk: “The company sought to preempt any litigation from customers hoping to recoup their losses, according to the filing.”

What was Canada’s largest cryptocurrency exchange went offline completely in January.

QuadrigaCX and Ernst & Young

Nova Scotia Supreme Court Judge Michael Wood suggested that the company’s hot wallet funds be sent to the safety of new cold wallets maintained by the exchange’s court-appointed monitor Ernst & Young (EY).

Now, a report released today confirms this has happened. According to EY:

“On February 14, 2019, after testing the transfer arrangements, the Applicants successfully transferred the following cryptocurrency to the Monitor […] The Monitor will hold the cryptocurrency in cold storage pending further order of the Court.”

>> Coinbase Wallet Expanding with New Support for Bitcoin Cash

QuadrigaCX’s online wallets, or hot wallets, have been almost emptied and the funds sent to EY. The tally includes 52 Bitcoin (BTC), 960 Ether (ETH), 33 Bitcoin Cash (BCH), 2,000 Bitcoin Gold (BTX), and 822 Litecoin (LTC).

A Bad Situation

A month on from announcing the issue, QuadrigaCX has still had no success in recovering the frozen crypto. It also then made a bad situation worse by losing a further 100 Bitcoin earlier in February when it mistakenly sent them to the cold wallets that it cannot access. It did not reveal exactly how this happened.

What a sudden downfall for QuadrigaCX, the largest crypto exchange in Canada. Is this a clear example of one issue with the security measure of the crypto private key system? What do you think?

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QuadrigaCX Can’t Access $190 Million in Crypto After Founder Dies

Around $190 million in cryptocurrency has been lost and locked away somewhere online where no one can reach it. What’s to blame? Canada’s largest cryptocurrency exchange, QuadrigaCX.

Back in December, the cryptocurrency exchange’s founder perished while in India. According to CoinDesk, a court filing states that the company does not have access to most of the funds, because the founder held the private keys. As of late-January, around 115,000 users have balances with the exchange.

The company announced it has filed for creditor protection but did not give full details as to why. Now, the filing itself gives answers. The company states that all the funds from the company were kept in offline, cold-storage wallets.

QuadrigaCX explained:

“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency 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.”

>> Ethereum 2.0 Inches Closer, Pre-Release Stable

While not all funds were kept in cold storage, it remains unknown at this time what portion was held in hot or cold wallets. Most exchanges keep a large reserve of their digital token in cold storage to prevent theft, and most exchanges that have been hacked are the ones with crypto stored in hot wallets that are easily accessible.

The company is evaluating the ways in which it can pay its customers back, if it isn’t successful in locating the funds. So far, there hasn’t been any success and the company is considering selling off its operating platform. The website is still down entirely for “maintenance” as QuadrigaCX scrambles to come up with a solution. At this time, no funds can be withdrawn from the system.

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