A Canadian crypto company had some bad news to reveal to its clients on Monday. Quadriga CX’s CEO Gerald Cotten passed away, while he was the only one to know a password that was able to unlock US $200 million.
Last week, Quadriga’s board shared to Bloomberg News that it was seeking a way to seek a creditor protection. However, clients who were unable to retrieve the “key” could not unlock the funds, the company reported.
In other words, thousands of clients have lost their crypto wallets overnight.
This comes as cryptocurrencies were heavily criticized for being volatile and unreliable. Millions of Bitcoin, Litecoin, Ether and other tokens might have been lost forever.
Secret Password was meant “to avoid fraud”
At the age of only 30, Canadian Gerald Cotten passed away last December 9th in India from complications of Crohn’s disease.
To many clients, the news was kept confidential until January 31st, where a press release was published on the company’s website.
Please see our statement regarding the sudden passing of our @QuadrigaCoinEx founder and CEO, Gerry Cotten. A visionary leader who transformed the lives of those around him, he will be greatly
— QuadrigaCX (@QuadrigaCoinEx) January 14, 2019
On Monday February 4th, financial website Bloomberg confirmed that the young entrepreneur had passed away, while keeping the password secret.
The Vancouver-based company said it was impossible to find an estimated US $200 million worth of cryptocurrencies.
According to Bloomberg, the late CEO allegedly moved wallets to new accounts – something that was allegedly unknown to his clients. Therefore, the operation was made so it would become impossible for customers to retrieve their funds.
Cotten was famous in the crypto industry for being extra-cautious. He was highly protective of his customers agency and was protecting all his laptop and email adresses.
His widow, Jennifer Robertson, said to Bloomberg that he probably moved “the “majority” of digital coins into cold storage.” She later confirmed that her late husband did not shared the password with her.
E&Y chosen as “proposed monitor”
While the company is now fearing a class action, Reddit forum was saturated with messages from clients over the weekend.
We have thousands of wallet addresses known to belong to @QuadrigaCoinEx and are investigating the bizarre and, frankly, unbelievable story of the founder's death and lost keys. I'm not normally calling for subpoenas but if @rcmpgrcpolice are looking in to this, contact @krakenfx
— Jesse Powell (@jespow) February 3, 2019
Other platforms, such as Twitter, also unveiled anger and frustration from clients. Some of them lost millions of dollars.
Dozens of users called the company a “scam” and asserted that the Bitcoin tokens that were sold simply did not exist.
As a result, Quadriga released a second statement to clarify the situation.
“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency,” the firm said. “Unfortunately, these efforts have not been successful.”
On Tuesday, February 5th a hearing from Ernst and Young will happen in order to understand the circumstances and locate the funds.
Read our story: “Why is Bitcoin Falling After Climbing So High?”
Is Crypto living its last hours?
While Bitcoin’s value hits new low, Quadriga was one of the most solid Bitcoin companies on the market. The Canadian company became famous while launching the first Bitcoin ATM in the country in 2014.
— QuadrigaCX (@QuadrigaCoinEx) October 24, 2014
Five years later, cryptocurrencies have lost their popularity. January 2019 marked Bitcoin’s consecutive seventh lowest month.
A lack of governmental regulation has pushed away investors, while numerous media have criticized cryptocurrencies for being mainly used by criminal organizations.
— Bitcoin Daily (@1bitcoindaily) February 5, 2019
Cryptocurrencies might face dire consequences because of this scandal if Quadriga does not manage to retrieve the digital wallets.
As a reminder, one Bitcoin token was worth $11,470 in March 2018. It is now only worth $3,409.
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