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Canadian Crypto Exchange Mistakenly Moved Additional Bitcoin into Wallet it Can't Access
FinTech, Blockchain, Financial Services
In its first report looking into what happened to the money that shuttered Canadian crypto exchange QuadrigaCX owes its investors, advisory firm Ernst & Young has found that an additional 103 bitcoin valued at C$468,675 ($354,300) were moved on Feb. 6 to a cold wallet protected by a password only its founder – who died in December – knew.
Quadriga owes its investors a total of roughly $250 million CAD (US$190 million) in both cryptocurrencies and fiat funds. Quadriga was granted a 30-day stay by a judge in the Supreme Court of Nova Scotia and Ernst & Young was assigned on Feb. 5 to oversee the crypto exchange’s restructuring under creditor protection, which means the additional bitcoin was transferred to the cold wallet after Quadriga had been granted its stay.
Citing court documents it had obtained from the Nova Scotia Supreme Court, CoinDesk reported that “there were roughly 115,000 users with balances signed up on the exchange, with $70 million CAD in fiat and $180 million CAD in crypto owed overall,” as of Jan. 31. Gerald Cotten, founder and CEO of QuadrigaCX, died of complications from Crohn’s disease while traveling through India last December.
Jennifer Robertson, identified in court filings as Cotten’s widow, said Cotten had “‘sole responsibility for handling the funds and coins,’ and the remaining team members have had no luck accessing the exchange’s cold wallets since,” CoinDesk reported. Some cryptocurrency specialists have called this story into question, with one analysis finding most of the funds had been transferred to other exchanges such as ShapeShift, Bitfinex and Poloniex.
In its report, Ernst & Young says that Quadriga “inadvertently transferred” the bitcoin to the cold wallets that it is unable to access. As of Feb. 12, Quadriga had a total balance of C$902,743 worth of cryptocurrencies in its hot wallets.
Ernst & Young notes that it “has identified and secured various Quadriga electronic devices reportedly owned or used by Mr. Cotten within the Quadriga operation,” including “two active laptops, two older model laptops, two active cell phones, two older ‘dead’ cell phones and three fully encrypted USB keys.”
Ernst & Young established a toll-free hotline (1-855-870-2285) and email account, [email protected], to allow interested parties to get updates on the court proceedings.
Photo: Getty iStock