All Forex eyes are firmly glued on the evolving QuadrigaCX mystery. Why?
Canada’s largest cryptocurrency exchange is currently unable to locate millions of dollars due to the death of its founder Gerald Cotten in December ‘18. Unable to access either the password or recovery key, there is complete turmoil surrounding the exchange, which eventually went offline February ‘19. Thousands of customers were left stranded unable to access their investments, and the company is currently seeking creditor protection in a Novia Scotia court.
Missing Password to a Black Hole
Gerald Cotten, the 30-year-old founder, didn’t trust anyone else with the password, not even his wife. Gerald died in India from Crohn’s disease complications where he was apparently planning to open an orphanage for children in need. It appears he has taken his encrypted access to Quadriga’s money to the grave with him.
Jennifer Robertson, his widow, swore in an affidavit that Gerald had “sole responsibility for handling the funds and coins”, meaning that around US$190m in cryptocurrency and cash is firmly locked in an online black hole in “cold storage.” These “vaults” are secure digital storage facilities invented to protect investments from hackers. So far, it seems they are working perfectly, as all expert efforts to locate the funds or bypass encryption on his laptop has failed.
Crypto Conspiracy Theories Abound
The mystery surrounding Gerald’s death and the missing password has, of course, fuelled conspiracy theories despite a death certificate. Speculation that he faked his own death stems from the fact that QuadrigaCX had been subject to legal trouble during 2018. The Canadian Imperial Bank of Commerce froze assets worth over US$25 million due to payment process “irregularities” and being unable to identify the real owners of the funds.
The Ontario Superior Court of Justice had reputedly only returned these funds just days before Gerald died. The company itself, like many exchanges, had no bank accounts and all payments and withdrawals were managed by third-party services. The platform also continued to accept investments after the founder’s death and only ceased trading on January 26. After two months delay, the company finally filed for creditor protection and on February 5 sought to appoint the independent monitor Ernst & Young.
Dangerous Side of Encryption
The whole debacle more than highlights the issues with cryptocurrency’s current lack of regulation. As it’s not controlled by any centralised institution, exchanges like QuadrigaCX have total control over any assets and investors are left vulnerable to hackers. Not to mention unusual situations like this one. When cryptocurrency became part of popular culture, it came with levels of unprecedented encryption layouts and dark web practices. With all the benefits of anonymity comes some potentially dangerous disadvantages.
Gerald’s wife Jennifer insists she is not in possession of any business records or any passwords for his encrypted laptop, despite searching extensively. QuadrigaCX insists that it has been working tirelessly to find and secure the missing cryptocurrency reserves, including hiring experts. However, after all these weeks, success remains entirely elusive.
If Quadriga’s encryption experts are unable to crack the code, then investors will be left firmly in the black hole – along with their missing millions.