Baffled by Bitcoin? Here’s How Cryptocurrency Works
A Canadian cryptocurrency exchange in turmoil after its founder reportedly died with the only password to accounts valued at $145 million has hit a new snag, Bloomberg reports.
A court-appointed firm monitoring QuadrigaCX as it seeks creditor protection says the exchange accidentally transferred 103 bitcoins valued at $354,000 to the sealed accounts on Feb. 6, CoinTelegraph reported.
Gerald Cotten, CEO and co-founder of QuadrigaCX, died of “complications from Crohn’s disease” Dec. 9 while traveling in India to set up an orphanage, the firm wrote Jan. 14 on Facebook. He was 30 years old, according to CoinTelegraph.
In a filing Thursday for creditor protection with the Supreme Court of Nova Scotia, Jennifer Robertson, Cotten’s widow, said his death left the company unable to access the bulk of its crypto-currency funds, CBC News reported.
The filing says Cotten had the only password to so-called “cold storage” accounts, a form of savings, containing bitcoins deposited by 115,000 investors, CoinDesk reported.
He apparently left no record of the password, and security experts consulted by QuadrigaCX have been unable to crack the accounts, according to the publication. The filing seeks legal protection from investors while it tries to retrieve the bitcoins.
Bitcoins are the best known type of crypto-currency, a form of digital currency overseen by a decentralized network of computers around the world, The New York Times reported. Prices for bitcoins fluctuate wildly and are based on open-market bidding on exchanges.
Bitcoins must be stored on servers and can be kept in “hot wallets,” for immediate transactions, or “cold storage” as a sort of digital savings account to protect them from hackers, CBC News reported.
Ernst & Young Inc., the company named to monitor QuadrigaCX, revealed the inadvertent Feb. 6 transfer in a Tuesday report to the court, CoinTelegraph says. The bitcoins were sent to the same “cold storage” accounts locked by the missing password.
The firm is working with QuadrigaCX to try to retrieve the bitcoins from the locked accounts, CCN reported. If the accounts can’t be opened, the bitcoins will be lost, the site says.
Ernst & Young Inc. also reported that it’s working to recover data from four laptops, four cell phones and three encrypted flash drives, CTV reported.
Owners of other Canadian cryptocurrency exchanges are raising questions about Cotten’s reported death and QuadrigaCX’s business practices, ABC News reported.
“For them to say we can’t produce an address it just smells like something doesn’t make sense,” said Michael Gokturk, CEO of Einstein Exchange, the network reported. “Odds that they ran it from one laptop at one guy’s house, it’s unbelievable at best. I have 50 staff running an exchange half the size.”