- Quadrigacx filed for bankruptcy
- Reportedly, the death of Quadrigacx founder is the cause of the erupting saga
- It is all a sham; crypto community seems to believe so
Quadrigacx, a crypto exchange company based in Canada, published a notice on its website, on January 31, 2019, stating that it has been having liquidity issues owing to the loss of their cold storage wallets which contain significant cryptocurrency reserves.
On January 15th, Quadrigacx announced the sudden death of their founder and CEO, Gerry Cotton. Following his death, the company filed for bankruptcy claiming liabilities of over $200 million and assets worth almost $30 million.
The filing of bankruptcy was said to be due to the fact the company was unable to recover the private keys required to open its considerable cryptocurrency holdings. Apparently, the CEO was the only holder of the keys.
Hack Precautions Gone Bad
The laptop belonging to the founder Gerry is said to be heavily encrypted owing to his consciousness for the security of the keys and passwords. He was said to be wary of hacking, and therefore to avoid this he was the sole handler of funds, coins and the banking side of the business and moved a lot of the digital coins to cold storage.
“The laptop computer from which Gerry carried out the companies’ business is encrypted and 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,” his wife, Jennifer Robertson, said during the bankruptcy filing.
While these measures were prudent, the company can’t repay its clients since they are now left with no keys to access the funds as the passwords died with the founder.
The latest string of bad luck on Quadrigacx has spurred speculations in the crypto space, with some people questioning whether Gerry Cotton really is deceased, while others call into question if the whole saga is a schemed scam.
A user on twitter going by “CryptoMedication”, pointed out that no identifiable cold wallet reserves belonging to Quadrigacx were found, the company is using customers’ deposits to pay other customers’ withdrawals, and also the number of bitcoins reported in the affidavit presented in court is significantly more than what the company possesses.
Worse still, despite reports by the company of their inability to access their cold storage, some users have noticed that money continues to flow in and out of Litecoin wallets belonging to Quadrigacx and that the deputy CEO may be using a fake name.