QuadrigaCX, a Canadian-based cryptocurrency exchange platform, has been in the news a lot over the past few months. Following the untimely death of its CEO, Gerald Cotton in December 2018, QuadrigaCX account holders have been locked out of their funds.
The 115,000 account holders have been in a frenzy and about what will happen to their $143 million. At the time of his death, Gerald Cotton was the only one with the encrypted keys to recover the funds. Now users are worried that access to the funds is gone forever.
However a new and dangerous twist has been added to their worries.
Following a successful bankruptcy appeal in February 2019, court appointed monitor, Ernst and Young has discovered that the QuadrigaCX Bitcoin storages have no funds.
Ernst and Young discovered six Bitcoin cold wallets QuadrigaCX used to store cryptos away from hacking attempts. But unfortunately, five of the offline storages were empty. In fact they haven’t had any funds in them since April 2018.
Meanwhile the sixth storage was used to receive Bitcoins from another exchange account for transfers to Quadriga’s networked online wallet. And this was a less than $500,000 transaction which took place in December 2018.
“To date, the Applicants have been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Cold Wallets for deposits in April 2018, however, the Monitor and Management will continue to review the Quadriga database to obtain further information,” Ernst and Young wrote in their report.
This is the latest drama in the QuadrigaCX issue and once again, it’s testing the credibility and security of the cryptocurrency industry.
According to various reports, late CEO, Gerald Cotton was the sole brain behind QuadrigaCX.
“Quadriga had no offices, no employees and no bank accounts,” the BBC reports. “It was essentially a one-man band run entirely by Cotten wherever he – and his laptop – happened to be.”
Even his wife had no idea how the business was run and neither did he provide her with any documents or even the password to his laptop before he died in India.
Going forward there’s still no understanding of what will happen.
Ernst and Young is also investigating whether some of the cryptocurrency could be secured on other exchanges. But for now, it hasn’t found anything useful.
Investors remain worried and the entire crypto industry is paying keen attention to the developments and hoping it won’t affect their credibility.