In a bit of a bizarre news:
QuadrigaCX, the largest cryptocurrency exchange (by volume) in Canada, is in a world of trouble. The company may have just lost $145 Million (CAD $190 million) of its customer’s money. The company filed for creditor protection on 2/1/2019.
How?
The founder and CEO of QuadrigaCX, Gary Cotten, unexpectedly passed away. He held the keys – quite literally – to the exchange.
What happened?
The short version: The exchange kept its assets in offline storage systems, secured by cold wallet (think of it as your private digital key to protect your assets from hackers and theft).
This is generally considered a good practice. The only problem? In what is considered unusual, Cotten was solely responsible for the cold wallets and the keys. When he passed, they went with him. His wife had quoted in a sworn affidavit in regards to her husband’s encrypted personal laptop:
“I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.”
My thoughts
Truth be told, I haven’t made up my mind about cryptocurrency (the most recognizable being Bitcoin). I actually have very little interest in cryptocurrency itself, except perhaps at a curiosity level. What I find far more interesting is the underpinning technology, Blockchain. In simpler terms, I like to think of it as a ledger with a real potential to transform industries that relies on transactional processing.
It struck me as odd that for a company of his size, Cotten is the sole executive with access to the private keys. I would have expected a trusted second in command as a contingency plan.
Given the security around cryptocurrency, the money in QuadrigaCXcurrency exchange is likely lost. I would not be happy if I was one of the roughly 115,000 users.
But you can’t say they didn’t take security seriously.
I suppose one can say that the exchange is now so secured to the point that no one access the funds.
It would be interesting to see how this all unfolds.
Though, this story reminded me of the question: What Happens to Your Miles and Points When You Die?
Wow I’m not into cryptocurrency but just reading further, he was only 30 years old. May he rest in peace. The Canadian news agencies have been stating death was due to complications from Crohn’s disease and he passed away during his visit in India to open up an orphanage. I’m not familiar with Crohn’s disease but I agree it would have been a good idea to have a contingency plan given his health status despite his young age.
I also read that he was only 30 years (very young). I didn’t know he had Crohn’s disease, though; that’s sad. I know that there are some upset people and conspiracy theories out there, but I absolutely did not want to speculate on that. Thanks for the additional info. May he rest in peace.
Should have heeded Mr. Buffet’s advice. Crypto Currency is for suckers.