Failed crypto exchange QuadrigaCX hit the headlines again this week as a Canadian judge declined to appoint a law firm to represent Quadriga’s customers who lost access to nearly $200 million in Bitcoin and other cryptocurrencies last month, following the reported death of company founder and CEO Gerald Cotten.
CEO Cotten died unexpectedly in India in December having failed to leave the password for access to an offline, or ‘cold’ wallet. This meant that somewhere between $150 – $200 million of assets effectively ‘disappeared’.
The QuadrigaCX exchange held only $679,516 in assets in online wallets and less than $30,000 in cash. The battle by QuadrigaCX customers to recover their assets took another twist last week, as it was revealed in court that the embattled exchange managed to ‘lose’ track of over $460,000 in crypto coins last week.
Ernst and Young reported that someone working for QuadrigaCX “inadvertently” transferred 103 Bitcoins worth approximately $468,675 into a cold wallet that was and is, beyond the reach of the QuadrigaCX company.
Ernst and Young said in a statement:
“On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 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.”
Cotten Wife Questioned Over QuadrigaCX Dealings
The QuadrigaCX exchange was closed on January 28th, over a full month after Cotten’s death due to complications of Crohn’s disease whilst opening an orphanage in India on December 9th, The period in between allowed Gerald Cotten’s assets to be transferred to his wife in his will.
Some of the 115,000 exchange users who lost cryptocurrencies in the controversy are claiming the wife of 30 year old Gerald Cotten sent them deposits directly, contradicting the information presented previously to the courts.
Jennifer Kathleen Margaret Robertson signed an affidavit filed in Nova Scotia Supreme Court, saying she had no involvement in Cotten’s business dealings. If found that Robertson was knowledgeable about QuadrigaCX, creditors would go after the sizable estate left to her by her late husband. At least 16 properties were purchased and many remortgaged between 2016 and 2018 by Cotten and his wife.
Name changes, property trusts and remortgages have muddied the legal waters surrounding exactly what assets there are.
Currently, three law firms have applied to represent the QuadrigaCX users as QuadrigaCX struggles to repay the $196 million it owes creditors and the C$250 million it owes to clients.
On Thursday, a Canadian judge declined to appoint a law firm to represent Quadriga’s customers. However, the courts are expected to make a decision sometime next week.
