CEO death means crypto exchange QuadrigaCX can’t release $190m funds
The CEO of Canadian crypto exchange QuadrigaCX has died and up to $190 million in clients’ funds are trapped as a result.
According to Coindesk, QuadrigaCX says it cannot repay most of the money in client holdings after its 30-year-old founder Gerald Cotten, the only person who knew the passwords to its “cold storage,” unexpectedly died in India in December 2018.
In a sworn affidavit with the Nova Scotia Supreme Court in Canada, widow Jennifer Robertson said that QuadrigaCX owes its customers the money in both cryptocurrency and fiat money.
In a statement on its website, QuadrigaCX says it has applied for creditor protection in accordance with the Companies’ Creditors Arrangement Act (CCAA).
There will be a preliminary hearing today (5 February) to appoint a monitor, Ernst & Young, as an independent third party to oversee these proceedings.
QuadrigaCX says over the past weeks it has worked to address its liquidity issues, which include attempting to locate and secure its “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.
It adds: “Unfortunately, these efforts have not been successful.”
FinTech Futures contacted QuadrigaCX for more details. Its auto-response: “Thank you for contacting QuadrigaCX. We have recently switched to a new support system that can be accessed at support.quadrigacx.com. If you have a question or concern, please submit a support ticket using the new system. This email is no longer actively monitored.”
All this news has not been warmly received on places such as Twitter and Reddit. There are a lot of comments.
One user says: “India’s great place to fake your own death a month ago…”
Another notes: “I think I’m going to make a call to the RCMP [Royal Canadian Mounted Police], fraud department.”
Along with the death of its CEO and the missing money, a fake support account sprang up to complicate matters. It says: “Everyone will get their money back.” Unfortunately for the users the account is not real.
The crypto world seems beset by a lot of problems. Way more than any other part of the fintech sector.
Last month, the Monetary Authority of Singapore (MAS) was warning the public not to be misled by fake websites that solicit investments in cryptocurrencies using fabricated information attributed to the Singapore government.
In addition, confusion emerged as crypto exchange Liqui decided to close because it was no longer able to provide liquidity for its users left.