Canada's largest cryptocurrency exchange is unable to access millions in digital currency following the sudden death of its founder. The exchange's obligations to those users include cryptocurrency that was valued at some 180 million Canadian dollars ($137 million) in mid-December.
A common practice among cryptocurrency exchanges is to store customers' coins in cold wallets, which are offline and encrypted and can only be accessed by those who know the password.
What was the password again?
The founder held "sole responsibility for handling the funds and coins" and no other members of the team could access the stored funds, she added.
"Quadriga's inventory of cryptocurrency has become unavailable and some of it may be lost", Robertson wrote after her husband died suddenly of complications from Crohn's disease in December. "Despite repeated and diligent searches, I have not been able to find them written down anywhere", said Jennifer Robertson, Cotten's widow, in an affidavit.
"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", QuadrigaCX's Board of Directors wrote in a letter to customers on January 31.
Quadriga did not have offices or a bank account of its own; in the court filing, Robertson said, "Gerry ran the business through his laptop, mostly at our home, but also wherever he happened to be". "They've left us completely in the dark", said Elvis Cavalic of Calgary.
Quadriga CX's directors posted a notice on the firm's website on Jan 31 that it was asking the Nova Scotia court for creditor protection while they address "significant financial issues" affecting their ability to serve customers. 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.