QuadrigaCX Loses an Additional $500K in Bitcoin (BTC) by Accident

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QuadrigaCX, once the largest and longest-running Canadian crypto exchange, owes customers $250 million in CAD ($190 million USD) in cryptocurrencies and fiat money, in what has become the crypto scandal of the year. And on top of that, last week they purportedly lost an additional $500,000 CAD worth of Bitcoin (BTC) by mistake.

On December 9, 2018, CEO of QuadricaCX Gerald Cotten died in India from Crohn’s disease at the age of 30… or did he? His death or disappearance quickly went viral, as he was the sole holder of the private keys and passwords to the company’s cold storage wallets.

The lost cryptocurrencies include 26,500 bitcoins (BTC), 11,000 Bitcoin Cash (BCH), 11,000 Bitcoin SV (BSV), 430,000 Ethereum (ETH), 200,000 Litecoin (LTC), and 25,000 Bitcoin Gold (BTG), which together amount roughly $250 million in CAD ($190 million USD).

QuadrigaCX Accidently Loses Another $500K in Bitcoin (BTC)

Since Cotten’s death, QuadrigaCX filed for creditor protection in late January, and were appointed professional services firm Ernst & Young (EY) as their monitor by court order.

According to an initial report published on February 12, last week the failed crypto exchange accidentally moved more than 100 Bitcoins into a cold storage wallet they cannot access.

As stated in the report:

“On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 [CAD] to Quadriga cold wallets which the Company is currently unable to access. The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.”

Following this event, EY will take control of QuadrigaCX’s hot wallet funds by transferring the remaining cryptocurrencies to the firm’s own cold storage wallets. The remaining cryptos include 51 Bitcoin (BTC), 0.014 Bitcoin SV (BSV), 33 Bitcoin Cash (BCH), 2,000 Bitcoin Gold (BTG), 800 Litecoin (LTC), and 950 Ethereum (ETH).

QuadrigaCX’s Electronic Devices Impounded

EY has reportedly seized all electronic devices owned or used by Cotten within the Quadriga operation, including 4 laptops, 4 cell phones, and 3 encrypted USB keys. As of late, the devices are being held in a safety deposit box until EY’s forensic team determines how they will attempt to access them.

The monitoring firm is also attempting to unlock the exchange’s fiat balances by working with the Quadriga’s third-party payment processors. However, no progress has been made thus far.

EY’s recent report concluded that QuadrigaCX held $902,743 CAD ($682,000 USD) in their hot wallets, meaning that $179 million CAD (about $136 million USD) must be held in the inaccessible cold storage wallets.

Do you think EY will be able to recover customer funds from the cold storage wallets? Will they find the private keys somewhere? Let us know what you think in the comment section below.

1 Comment

  • Tiffany S Gyles
    Posted February 14, 2019 2:49 am 0Likes

    Wow….the people running that exchange are incompetent… this is why we need common sense regulations for exchanges.

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