Canada's largest cryptocurrency exchange owes its customers $190million

Canada's largest cryptocurrency exchange owes its customers $190million

The widow of Gerald Cotten, founder and director of QuadrigaCX, said in a court filing last week that Cotton never shared his business passwords before his unexpected death in December 2018.

According to a research piece from a leading industry researcher, QuadrigaCX, a Canadian Bitcoin (BTC) exchange in the midst of a multi-month imbroglio, could have been fibbing about its cryptocurrency holdings - and by a large sum at that. No conclusive figures could be pinned, but the researcher also divulged that Quadriga enlisted the use of fractional reserves to service its customers, using client deposits to issue withdrawals. However, Mr Cotten appears to have failed to leave behind any note of a password or key to a digital "wallet" containing C$250 million (£145 million) of Bitcoin and other cryptocurrencies for 115,000 account holders.

"The transfer of coins from the cold wallet to the hot wallet was performed manually by [Cotten]", the affidavit from Robertson states.

Saying "there should be in excess of [CA]$180 million of coins in cold storage", Robertson wrote that the company is still trying to access the wallets, in addition to looking into the possibility that Cotten had used other exchanges to secure some of those funds. But Robertson provided the court with a copy of Cotten's death certificate, court records show, and Robertson said she and QuadrigaCX's interim chief executive have been hit with threats and "slanderous comments" by angry customers. The company's stance has gone from "Quadriga's inventory of cryptocurrency has become unavailable and some of it may be lost" to "most, if not all" of their customers will suffer damages.

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Robertson has access to Cotten's laptop but writes that she is unable to open it. "I would probably avoid [cryptocurrency] in the future", Quadriga user Elvis Cavalic of Calgary, Alberta, told the CBC news agency.

Robertson's affidavit notes that a copy of Cotten's death certificate was submitted to the court, with the J.A. Snow Funeral Home stating that he died on December 9, 2018, in Jaipur, India.

Robertson has retained an expert to try to access the funds but he has so far not been able to do so.

In a statement posted on its website on January 31, QuadrigaCX said that it applied for creditor protection in the Nova Scotia Supreme Court "to allow us the opportunity to address the significant financial issues that have affected our ability to serve our customers".

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