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February 4, 2019updated 08 Feb 2019 10:28am

Crypto exchange owes $190 million after founder dies with password

By Patrick Brusnahan

Crypto exchange QuadrigaCX believes it cannot repay close to $190m in client holdings after the death of its founder.

The Canadian firm’s founder Gerald Cotten unexpectedly died in India in December 2018. Furthermore, according to Coindesk, it is said that he is the only person who knew the passwords to its cold storage. In fact, he held “sole respoinsibility for handling the funds and coins”.

In an affadavit filed with the Nova Scotia Supereme Court, Jennifer Robertson, the widow of Cotten, said that exchange owes $190m in both cryptocurrency and fiat.

As of January 31 2019, there were around 115,000 users with balances signed up on the exchange with C470m in fiat and C$180 in cryptocurrency.

Roberston said: “The normal procedure was that [Gerald Cotten] would move the majority of the coins to cold storage as a way to protect the coins from hacking or other virtual theft.

Currently, it is not clear how much is kept in cold store, but Robertson explained that “only a minimal number of coins” in the hot wallet rather than in cold storage.

Cotten reportedly died of Crohn’s disease in early December 2018.  Robertson has Cotten’s laptop, but the device is encrypted and does not hold the password. In addition, a consultant has been retained to try and recover the laptop’s contents with no luck so far.

QuadrigaCX: the start of a trend?

Digital currencies like Bitcoin and the initial coin offering (ICO) have captured the attention of millions of consumers and investors.

Looking into the global trend of crypto-assets, the Cambridge Centre for Alternative Finance (CCAF) published its second annual report on the evolving ecosystem.

The report provides a snapshot of the development and growth of crypto across 180 different entities and 47 countries. It highlights the dynamic landscape of the industry through four key segments – mining, storage, exchange and payments – that collectively grew by more than 160% in 2017.

The immense popularity of Bitcoin has crossed over to other types of crypto-asset, which have come under both praise and criticism from the media.

Many fintech start-ups including Chain2Pay, Paycent, FuzeX, and Wirex have launched cryptocurrency debit cards with the aim of creating more cohesion between cryptocurrencies and fiat money. However, these have been described as a novelty. 

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