February 6, 2019

OOPS: A Crypto-Mystery: Is $140 Million Stuck or Missing?

On Jan. 15, the company announced on its website that Mr. Cotten had died on Dec. 9 from complications related to Crohn’s disease while building an orphanage in India. He was 30 years old. Two weeks later, the exchange filed for bankruptcy protection in a Nova Scotia court.

Quadriga said its customers have accounts with a total balance of about C$250 million. Only about C$70 million of those customer funds is in cash. About C$180 million, or about $140 million, is in cryptocurrencies held in a reserve account maintained on Mr. Cotten’s laptop, the company said in its bankruptcy filing. Quadriga would need control of that account to send those cryptocurrency funds to customers.

Mr. Cotten ran the business out of his home in Fall River, Nova Scotia, his widow, Jennifer Robertson, stated in an affidavit. Ms. Robertson said Mr. Cotten was the only person who moved funds from an active account—called a “hot wallet” in crypto circles because it is connected to the internet—to the reserve account, which is an offline “cold wallet.” The company said it has been unable to break into Mr. Cotten’s laptop to try to recover the access keys.

If the laptop can’t be accessed, the funds could be permanently frozen.

Poof.

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