The cryptocurrency exchange company QuadrigaCX, which was founded in 2013, has entered dark digital waters. The Canadian company lost its founder and CEO, Gerald Cotton (also being spelled Cotten by reporters), to Crohn’s disease last December while he was in Jaipur, India.
His widow, Jennifer Robertson, in a sworn affidavit filed on Jan. 31, 2019, stated QuadrigaCX owes its users nearly $250 million in Canadian currency (an equivalent to $190 million USD) in cryptocurrency and fiat money.
What makes the entire situation all more difficult for QuadrigaCX is that Robertson informed the court that the customers’ cryptocurrency is stored on Cotton’s encrypted laptop. On file on Cotton’s laptop sits a small veritable fortune, and so far none of the hackers Quadriga has employed to breach the encryption have been able to access it.
This fortune is said to include 26,500 bitcoins, 11,000 bitcoin cash, 11,000 bitcoin cash SV, 35,000 bitcoin gold, close to 200,000 litecoin, and about 430,000 ether. Tallied together, the lump sum of inaccessible wealth comes to a grand total of $147 million USD. Meanwhile, QuadrigaCX itself has under half a million dollars in cash.
Gerald Cotten, the Late Founder & CEO of QuadrigaCX. Source: Reddit.
QuadrigaCX’s recent update on their personal website reads as follows:
Dear Customers,
An application for creditor protection in accordance with the Companies’ Creditors Arrangement Act (CCAA) was filed today 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. The Court is being asked at a preliminary hearing on Tuesday February 5 to appoint a monitor, Ernst & Young Inc., as an independent third party to oversee these proceedings.
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. Further updates will be issued after the hearing.
As the situation stands currently, the outcome does not look too promising, both for QuadrigaCX and its customers. As you can imagine, this does not make for happy customers. Isaiah Mayersen of Techspot reports the compony’s “ employees have admitted that they’re even receiving death threats.”
An opportune legal outcome would consist of the court allowing QuadrigaCX to use a sum of close to $50 million which is stuck in a Canadian bank due to a legal dispute. Some of this money (also inaccessible at the moment) actually belongs to QuadrigaCX customers.
QuadrigaCX is now entertaining the possibility of selling its operating platform in an attempt to pay back its users to whom the company is indebted.