Unfortunate Transfer of $500K Bitcoins to Cold Wallets Increases QuadrigaCX Turmoil Further

Unfortunate Transfer of $500K Bitcoins to Cold Wallets Increases QuadrigaCX Turmoil Further

Various disturbing news about the turmoil of QuadrigaCX have been surfacing for the past few weeks. QuadrigaCX is one of the top Canadian crypto exchanges. The sudden death of its founder Gerald Cotton in December 2018 has shocked the investors of the exchange.

Initial Reports

In the beginning of February, there were reports that the exchange has lost 190 million CAD. There were also reports that the exchange owes $260 million to the clients. The death of the founder had created unimaginable miseries in the lives of the investors. Investors knocked the court for recovery of their lost wealth. It had appointed a monitor to search for the lost wealth.

First Court Report Submitted by Ernst and Young

Here, it is worth noting that the exchange had already appointed the ‘big four’ audit company to look into the matter of creditor protection case. The court had appointed a monitor on the audit team. Now, it has submitted the first report to the court. This report named ‘first report of the monitor’ has revealed that the exchange has accidentally transferred another 103 bitcoins to a cold wallet on February 6, 2019.

QuadrigaCX, cryptocurrency, Bitcoin, Cold Wallets

The management of the exchange along with the monitor is trying their best to retrieve the money from different cold wallets. Here, it is also important to mention that the company had lost the keys with the death of the founder. This is because Gerald Cotten was the only person who knew where the keys were.

Ernst Young Future Plans

The professional audit service has now decided to transfer the remaining cryptocurrency into its own cold wallet. Currently, the company owns 51 bitcoins, 0.014 bitcoin cash SV, 33 bitcoin cash, 2000 bitcoin gold, 800 litecoin, and 950 ether.

Reports are also saying that EY has taken control of all the electronic devices owned by the founder. These include four laptops, four mobile devices, and three USB encrypted keys. The audit company intends to keep these belongings in a box. EY has also mentioned in its report that it is trying to unlock the exchange’s fiat currency balances with the help of some professional payment services providers. Court documents also disclose the statement of the founders’ wife. Jennifer Robertson admits that only her husband knew about the keys to cold wallets.

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What are Cold Wallets?

Cold wallets are the offline wallets to store cryptocurrencies. Each cold wallet has its own unique keys that help the owner to use the wallet for sending, receiving, and even trading cryptocurrencies. Encryption technology is the core of these cold wallets. The users can store these encryption keys either in their systems or at another safe place.

QuadrigaCX, cryptocurrency, Bitcoin, Cold Wallets, Cryptocurrency Exchange

On the other hot wallets are always online and offer the facilities of crypto trading. Usually, these wallets store small amount of cryptocurrency that the users can use for trading.

EY Suspects more than One Laptop in the Case

Jennifer says that all the encryption keys may be in the laptop of Cotten. But, the investigation conducted by EY points out the role of more than one laptop in the whole case. This is because they have retrieved two new as well as two old model laptops from encryption expert. Moreover, the two active cell phones and three encrypted USB devices may also contain the security keys.

Ontario Securities Commission (OSC) is also looking into the case minutely. They are also in regular contact with the monitor appointed by the court to resolve the matter as soon as possible. But, they have denied any official inquiry on their part. It is also informative to reveal that British Columbia Securities Commission had not regulated the exchange. This is because it showed no signs of trading of securities or operating as an independent exchange.

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