The Mystery Of Millions In Crypto Currency That Disappeared After Crypto CEO Dies
— 11 March 2019

The Mystery Of Millions In Crypto Currency That Disappeared After Crypto CEO Dies

— 11 March 2019

The story surrounding the disappearance of $137 million USD from Canadian cryptocurrency startup QuadrigaCX has become even more absurd after it was revealed last week the missing money had actually been moved from the original crypto wallets eight months prior to the money first being reported missing.

The mystery of the missing cryptocurrency began last December when Gerald Cotten, the CEO of the Canadian company, died in India from a complication related to Crohn’s disease. Cotten had sole access to over the 115,000 cryptocurrency wallets the business controlled, holding them in ‘cold wallets’, which in simple terms is an offline bank vault keeping the wallets secure from financial crime. While this is great for customers as their funds are essentially unhackable, it’s a massive problem when nobody else possesses the access codes, as was the case with Cotten.

When word got out that nobody could retrieve the funds, all manners of conspiracy theories were bandied about with some believing Cotten faked his own death and ran off with the cash. Others sported the ideas that Cotten had actually been murdered and had given the passwords up to his attackers so they could flee with the money. 

One of the biggest accounting firms in the world, Ernst & Young, were court-appointed to audit the business and recover the secured funds. They were given access to Cotten’s laptop, USB keys and home computer. After going through thousands of online transactions and public blockchain records Ernst & Young discovered the digital wallets containing millions had been emptied. It was all gone.

But in an even bigger twist, they found out the currency had been moved in April, a full eight months before Cotten’s death, as stated in a report from Ernst & Young last week

“In April 2018, the remaining bitcoin in the Identified Bitcoin Cold Wallets was transferred out bringing the balances down to nil,” the report said. Ernst & Young also found other troubling issues, including QuadrigaCX kept “limited books and records” and never reported its financials.

All authorities have been able to identify is the funds were moved from their original locations to 14 user accounts internally created under various aliases and then withdrawn to addresses not tied to QuadrigaCX. Where the money is now is anyone’s guess, but most think the funds have been used for nefarious activities and QuadrigaCX is a shell company used to cover the tracks of those involved. Kraken, another crypto exchange, is offering $100,000 for information on where Quadriga’s cash has gone, while James Edwards, a researcher, believes he may have found some of the money on three other cryptocurrency exchanges. 

This is just another bump in a long list of recent problems plaguing the cryptocurrency world, with more and more people becoming less trusting of the wild west nature of the digital currency environment. The fact that people are trusting their money with a significantly less regulated exchange controlled by people who can manoeuvre their funds with little accountability is the major reason cryptocurrency is still seen as such a risk. Until regulations and stricter rules are put in place, I think I’ll continue to keep my money with the banks.

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