Embattled crypto exchange accidentally sent $370,000 of bitcoin to dead owner
Story by: Aaron Hankin
The story of a Canadian cryptocurrency exchange that famously lost millions in funds when its founder died abruptly has taken another curious twist after court documents on Tuesday revealed that the exchange sent more than 100 bitcoins last week to the founder’s cold wallet.
The report, filed by Ernst and Young, the firm appointed to monitor QuadrigaCX, revealed the transfer occurred on Feb. 6, a day after the courts granted Quadriga a stay of proceedings in a bid to stop any lawsuits against the company. Quadriga “inadvertently” transferred 103 bitcoin, valued at C$468,675, or about $370,000. “The Monitor (EY) is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible,” according to court documents filed with the Supreme Court of Nova Scotia on Feb. 12.
A cold wallet is where a crypto owner stores their digital currency offline to prevent the coins from being hacked. However, an affidavit from Jennifer Robertson, the widow of deceased owner Gerald Cotten, revealed Cotten was the only person with access to the passwords associated with the company’s asset stash.
According to court documents, it is unknown who undertook the transfer of the bitcoins.
The 103 bitcoins, BTCUSD, -0.38% worth around $370,000 at market value, made up more than two-thirds of the total bitcoins sitting in the exchange’s hot wallet and totaled more than half of the funds deemed retrievable. Other cryptocurrencies sitting in the exchange’s hot wallet include Bitcoin Cash,BCHUSD, -0.41% Ether ETHUSD, +0.27% and Litecoin, LTCUSD, -4.51% Bitcoin Cash SV and Bitcoin Gold.
In an interview with The Globe and Mail, Nick Chong, head of North America exchange Liquid, said the transfer is the equivalent of throwing money into a black hole. “I think that QuadrigaCX customers would expect that after the company had filed for creditor protection, what remained of the lost funds would be safeguarded with the help of the court and its appointed monitors,” he said.
The story of Quadriga has commanded the attention of the crypto industry, with a number of alternative theories as to what has transpired since the owners death in December. On Feb. 7, The Wall Street Journal reported that two independent research firms said the cryptocurrency may not in fact be trapped, instead it was transferred to other exchanges. The research firms came to this conclusion after tracking transaction data associated with accounts of the exchange.
But for now, customers of the exchange are left high and dry, with the estimated total loss standing at $190 million.
Court proceedings will continue on Thursday, where creditors will be appointed lawyers to represent them in the case.
Original story by: https://www.marketwatch.com/story/embattled-crypto-exchange-accidentally-sent-370000-of-bitcoin-to-dead-owner-2019-02-13
by 