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More than $460000 in Quadriga cryptocurrency disappeared into so-called 'cold wallets': court documents - The Globe and Mail

Published 3 months ago

More than $460000 in Quadriga cryptocurrency disappeared into so-called 'cold wallets': court documents - The Globe and Mail

The Globeand Mail via

Ernst Young, which was appointed as monitor on Feb. 5 when the Nova Scotia Supreme Court granted Quadriga creditor protection, says the company “inadvertently” transferred the bitcoins on Feb. 6 to cold wallets that it is unable to access. Cryptocurrency exchanges often keep some of their assets in offline storage locations, referred to as cold wallets, to protect them from hackers. The company previously said it has been unable to access its cold wallets since the death of chief executive officer Gerald Cotten, who, according to his wife, passed away from complications related to Crohn’s disease in December while he was travelling in India.

Mr. Cotten was the only company employee who was able to access these wallets, which could hold as much as $180-million worth of missing cryptocurrency, the company has said. Story continues below advertisement Ernst Young says in a report filed Tuesday that it was advised the company held the equivalent of $902,743 in cryptocurrency in “hot wallets” – which are cryptocurrency wallets that are connected to the internet – on its servers. But on Feb. 6, the day after the court granted QuadrigaCX a 30-day stay shielding it from legal action by panicked customers, the company transferred 103 bitcoins, worth $468,675, to a cold wallet.

“Those 103 bitcoins were essentially thrown into the crypto-equivalent of a black hole, because QuadrigaCX apparently does not have the passwords to the cold wallets,” said Nick Chong, head of North America for Quoine, a Japanese company that operates an exchange called Liquid. “I think that QuadrigaCX customers would expect that after the company had filed for creditor protection, what remained of the lost funds would be safeguarded with the help of the court and its appointed monitors, and that any movement of funds into or out of wallets would be tightly controlled.” Ernst Young says in its report that it has made arrangements to transfer the remaining cryptocurrency – which includes 51 bitcoins, $133,800 of ether, $36,961 of litecoin, $25,570 of bitcoin gold and a small quantity of bitcoin cash – into a cold wallet that it will retain itself, pending a court order. Coin spectator is an automated news aggregation service. All copyrights belong to their respective owners. Images and text owned by copyright holders are used in reference to and promotion of those respective parties. Read in Full

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