Make Sure Your Bitcoin Password is Safe: Cryptocurrency Exchange Can’t Access $190 Million in Holdings!
Gerald Cotten, the founder of Canada’s biggest cryptocurrency exchange, QuadrigaCX, died unexpectedly due to complications with Crohn’s disease. According to the washington Post, Mr. Cotten was the only person with the password to access the cryptocurrency accounts, which leaves his 115,000 client’s unable to access more than $190 million of holdings. It seems the company didn’t announce Cotten’s death until more than a month after he died, and as customers panicked and tried to withdraw their funds, QuadrigaCX’s website went down, and the company went off the grid. When QuadrigaCX broke its silence a week later, the company revealed it had filed for creditor protection in the Nova Scotia Supreme Court, according to reporting from Coindesk. Evidently, Cotten was the sole person responsible for transferring QuadrigaCX funds between the company’s “cold wallet” — secure, offline storage — and its “hot wallet” or online server, according to court documents. Very little cryptocurrency was stored in the hot wallet for security purposes. Cotten’s laptop was encrypted, and his widow, Jennifer Robertson, and the expert she hired have been unable to access any of its contents. The company had no corporate bank accounts and used third-party services to manage payments and withdrawals.
This creates a huge problem for investors, and is one of the many issues taxpayers can deal with as cryptocurrency becomes more prevalent in business and as an investment.