Cryptocurrency investors locked out of millions after exchange's founder dies
A cryptocurrency platform that lost access to millions of dollars when its founder died with sole knowledge of company passwords has been granted a temporary reprieve from creditor lawsuits.
Halifax judge Michael Wood on Tuesday ordered a 30-day stay that precludes filing of claims against Quadriga, a Canadian cryptocurrency exchange that has left thousands of investors without their money after the death of founder Gerald Cotten. Customers have threatened lawsuits.
Ernst & Young has been appointed the company's third-party monitor, to help manage Quadriga's finances during the process.
Cotten, who died in December of complications from Crohn's disease while in India, was the only person who had passwords to digital wallets containing C$180 million ($137.13 million) in cryptocurrencies, according to court filings. He was 30 years old.
“Despite repeated and diligent searches, I have not been able to find (the passwords) written down anywhere,” his widow Jennifer Robertson said in an affidavit.
A court file indicates Quadriga owes 115,000 users the equivalent of C$250 million ($190.46 million). The document showed Quadriga has $30 million in bank drafts, many of which it has had trouble depositing.
Lawyer Maurice Chiasson told the court the company wants time to find the C$250 million it owes users. According to court filings the company is considering selling its platforms to cover its debts.
The wallet in question was "cold," which means it was not connected to the internet so as to prevent hacking.
Cole Diamond, CEO of Coinsquare based in Toronto, said it is unusual to hold a cold wallet under one signature.