QuadrigaCX used to Canada’s biggest Bitcoin exchanges. It had been recently reported that its founder, Gerald Cotten, had suddenly died from the Crohn disease at the young age of 30. He found his death in Jaipur, India, in early December 2018.
It had also been reported that Cotton was the only one having access to the cold storage of the exchange’s main wallet. The latest court filing claims that QuadrigaCX owes its customers roughly 250 million CAD, equivalent to $190 million.
As of the end of January 2019, over 115,000 users had a positive balance on their QuadrigaCX account; funds were divided as 180 million CAD in crypto and the rest 70 million CAD in FIAT. To this point, the division between the exchange’s hot and cold wallet is unclear.
The Advantages of the Blockchain
Using blockchain’s transparency, new research has been tracking Quadriga’s Litecoin cold wallet and observed funds moving out of funds from the exchange’s wallet.
As a reminder, to move funds out of any wallet, one must have access to its private keys. This proves that the plot of Cotten’s sudden death could quickly turn into thieving or robbery.
Even tough Litecoin is not the dominant cryptocurrency held by Quadriga; it could give some clues to this mystery that could easily end up as another MT.Gox added to the crypto hacks hall of fame.
The investigation doesn’t claim Cotten hasn’t died, though there is a death certificate proving that. However, this raises many questions regarding the claim that the exchange ‘lost’ the $190 million.
The Disadvantages of the Blockchain
Neither if Cotten died, nor if he was the sole one having access to the cold storage private keys, this raises the need for finding solutions to this future problem of inheritance.
As we discussed before, some companies are developing solutions to this problem. One of those is a wallet feature that will automatically transfer funds out of a wallet in case it hasn’t been accessed for a certain amount of time (i.e., six months). Such a solution could have been solving the QuadrigaCX situation.
Crypto exchanges rules and regulations will be changed accordingly, and exchanges will be obligated to secure their funds using such methods.
The post Change in The Plot? QuadrigaCX $190 M Loss Could Turn Into Theft Following Its Litecoin Sudden Move appeared first on CryptoPotato.