A cryptocurrency exchange in Canada has revealed they can't repay most of their clients' $190 million in Bitcoin, Litecoin, Ether, and fiat currency holdings, and no, it wasn't because of a 51 attack.
QuadrigaCX's founder Gerald Cotten, 30, died "due to complications with Crohn's disease" while travelling in India to open an orphanage in December, his wife Jennifer Robertson said.
The news followed a decision by Canadian Imperial Bank of Commerce (CIBC) to freeze US$28 million of assets held by Quadriga after saying it was unable to identify the real owners of the funds.
In Quadriga's application it says it now owes roughly 115,000 users $70 million in currency and an additional amount of cryptocurrency coins valued at approximately $180 million based on market prices in December.
However, the funds stored in cold wallets were more as compared to the hot wallets.
According to a report by CoinDesk, a court filing suggests that crypto exchange owes $250 million CAD as most of the funds were kept in a cold wallet (a physical device that isn't connected to the internet) which could be accessed only by Gerald.
Crypto exchange ‘loses £145,000,000’ after founder dies with the only password
She has her husband's laptop but she does not know the password and a technical expert they hired had not been able to bypass its encryption, she told the court.
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".
The problem is, Robertson said she can't find his passwords or any business records for the company.
Robertson said in her affidavit she has received online threats and "slanderous comments", including questions about the nature of Cotten's death, and whether he is really dead.
In a statement posted on its website on January 31, QuadrigaCX said that it applied for creditor protection 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".
At a court hearing on February 5 the company is seeking to appoint Ernst & Young as an independent monitor.
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