The death of Canadian crypto exchange QuadrigaCX CEO Gerald Cotton in December 2018 and the platform’s subsequent filing for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) on February 5th has left company officials struggling to locate roughly $180 million in missing cryptocurrency.
Court filings in the Nova Scotia Supreme Court show that QuadrigaCX staff has been so far unable to locate the missing cryptocurrency or an additional $70 million in cash, owed to users. This has resulted in a major cause for concern among Vancouver-based QuadrigaCX’s 115,000-strong user base.
Key to the possible location of the missing cryptoassets is an encrypted laptop which has been given to a court-appointed third-party monitor. The laptop was previously held by QuadrigaCX’s representatives. Because the assets are believed to have been stored in an Ethereum cold wallet – which are typically removable media such as USB drives or other external hard drives and are securely stored offsite – the court has acknowledged this is not a typical bankruptcy.
Contributing to the problem is that Cotton had sole control of the exchange’s cold wallet private keys. When Cotton died, the company reported it had lost the keys. If the keys are not recovered, QuadrigaCX’s lawyers have stated they will consider selling the exchange in order to pay off its debts.
QuadrigaCX’s representatives have asked the court for a 30-day stay of proceedings.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
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