QuadrigaCX, a cryptocurrency exchange based in Canada, reportedly lost US$145 million (~RM613 million) of its customers assets, after its CEO and founder Gerald Cotton suddenly passed away. Taking the passwords of the cold wallets with him to the grave.
According to an affidavit filed by the company on 31 January 2019, Cotton’s death and the loss of the passcodes has cost the company access to 26500 Bitcoins worth US$92 million (~RM376 million); 1100 Bitcoin Cash worth US$1.3 million (~RM5.32 million); 11000 Bitcoin Cash SV worth US$707000 (~RM2.89 million); 35000 Bitcoin Gold worth US$352000 (~RM1.43 million); 200000 Litecoin worth US$6.5 million (~RM26.5 million); and 430000 Ether worth US$46 million (~RM188 million).
It gets even worse for the QuadrigaCX. Because of the inaccessible funds, the company apparently has less than US$500000 (~RM2.04 million) in cash.
For the uninitiated, it is an accepted (and expected, depending on who you talk to) practice among people and company trading in cryptocurrency to store their coins into what is referred to as a cold wallet. Cold wallets are encrypted and offline, making access to these digital storage units exceedingly difficult if you don’t know their access codes.
In this scenario, it appears that the exchange’s CEO was the only one with the passwords to the cold wallets. So far, QuadrigaCX has hired several hackers to try and break into the cold wallets, but to no avail so far. In light of the situation, the company is also trying to stave off legal proceedings from Canada’s Supreme Court, in an attempt to access US$50 million (~RM204 million) that is currently trapped in a Canadian bank.