Digital exchange loses $137 million as founder takes passwords to the grave

[iam4liberty]

Good reminder that no-one owns cryptocurrency.  One simply controls the ability to adjust a ledger.  Lose that control and all value disappears.

https://arstechnica.com/information-technology/2019/02/digital-exchange-loses-137-million-as-founder-takes-passwords-to-the-grave/?amp=1
Digital exchange loses $137 million as founder takes passwords to the grave

A cryptocurrency exchange in Canada has lost control of at least $137 million of its customers’ assets following the sudden death of its founder, who was the only person known to have access to the offline wallet that stored the digital coins. British Columbia-based QuadrigaCX is unable to access most or all of another $53 million because it’s tied up in disputes with third parties.

[FreeLancer]

A young CEO with sole control of customer's coins "goes to India to open an orphanage and dies" with no business continuity plan?

Gox imploded 5 years ago, people.  It's not like we have to reinvent the wheel, here. 

He who controls the keys controls the coins.

[FreeLancer]

Lots of people crying exit scam.....

Kraken's CEO questioning whether there's an actual body to support the death certificate and even offers to share thousands of their exchange's known QuadrigaCX addresses with the Royal Canadian Mounted Police.

https://twitter.com/jespow/status/1091863628066770944

Chain analysis is a bitch for thieves. 

[FreeLancer]

Absolutely boggles my mind that a software engineer would be in this position.  Not only does he put everything into crypto, he puts it all on one exchange??!! 

California Engineer Loses $422,000 in Life Savings after Using QuadrigaCX; Is Help Coming?

Tong Zou, 30, said in an interview to Bloomberg that he had opened a withdrawal request at QuadrigaCX in October 2018. According to his statements, he was planning to move to Canada at that time. Zou thought using a cryptocurrency exchange for remittance would save him money. So, he purchased bitcoins in the US and transferred them to his Canada-based Quadriga CX exchange account for a quick fiat withdrawal.

“It’s all my savings, so I’m just living on what little I have left and trying to start over,” said Zou. “It pretty much took everything away from me […] I was going to use that money for a deposit on an apartment, but now I can’t do that anymore. And now I’m currently searching for a job, so it’s kind of a bad time for me.”

Chain analysis is a bitch for thieves. 

A Crypto-Mystery: Is $136 Million Stuck or Missing?

Multiple independent analyses of the ETH, LTC, BTC blockchains cast doubt on the existence of cold storage wallets.  Until QuadrigaCX reveals the public addresses verifying appropriate balances and the absence of recent transactions following the CEO's "death" we have to assume it's all been stolen.

[FreeLancer]

Reports today say the cold wallet addresses have been made public and they are missing 26,000 BTC.  One had been emptied 3 days before the CEO’s “death.”

[FreeLancer]

Ernst and Young, QuadrigaCX's bankruptcy trustee, has released a report indicating the CEO stole and squandered the vast majority of client funds before "dying" in India.

https://www.coindesk.com/quadrigacx-ceo-set-up-fake-crypto-exchange-accounts-with-customer-funds

In a bombshell 70-page report released Wednesday, Ernst & Young claimed that Gerald Cotten, who apparently died last December, transferred millions of dollars in crypto out of customer accounts and into other exchanges, with the funds being used to furnish Cotten’s personal lifestyle and trading habits. Overall, it appears that Cotten effectively stole more than $200 million USD from his customers.

“Significant volumes of Cryptocurrency were transferred off Platform outside Quadriga to competitor exchanges into personal accounts controlled by Mr. Cotten,” the report said. “It appears that User Cryptocurrency was traded on these exchanges and in some circumstances used as security for a margin trading account established by Mr. Cotten.”

Fees and trading losses “appear to have adversely affected Quadriga’s cryptocurrency reserves,” while other sums were sent to wallets whose owners EY could not confirm.

Between 2016 and the end of 2018, Cotten transferred 9,450 bitcoin, 387,738 ethereum and 239,020 litecoin out of his exchange’s accounts (respectively, $88 million, $105 million and $33 million USD at present market prices, though their values have fluctuated – and increased dramatically – over that time).

Cotten also appears to have created fake accounts on Quadriga, credited them with fiat amounts that did not actually exist, and use this fake fiat to purchase actual crypto from customers, with the largest account using the name Chris Markay.

EY also believes that properties in Nova Scotia, properties in British Columbia, investment securities, cash holdings, a boat, an aircraft, luxury vehicles and gold and silver coins that purportedly belonged to Cotten, and now belong to his widow Jennifer Robertson were paid for using Quadriga’s customers’ funds, and therefore should be liquidated.

“As Mr. Cotten’s and Ms. Robertson’s personal expenditures and the accumulation of their personal assets since 2015 was sourced from Quadriga funds, the Trustee intends to seek the recovery of the Preserved Assets subject to the Asset Preservation Order back to the Estate for immediate liquidation on the basis that the funds which Mr. Cotten directed be paid to them constitute preferences or transactions at under value under the BIA and may be subject to other causes of action asserted by the Trustee,” EY wrote.

The proceeds from these sales, if successful, will go to the creditors’ estate, and could total as much as $12 million CAD ($9 million USD).

[FreeLancer]

Unable to Retrieve Money, Cryptocurrency Investors Want Dead Executive Exhumed

Lawyers appointed by the Supreme Court of Nova Scotia, where Quadriga is based, to represent its users asked Canadian law enforcement officials in a letter on Friday to exhume his body and conduct an autopsy “to confirm both its identity and the cause of death.”

They cited “the questionable circumstances surrounding Mr. Cotten’s death and the significant losses” suffered by his company’s investors, as well as “the need for certainty around the question of whether Mr. Cotten is in fact deceased.”

And time is of the essence, they said. The lawyers requested that the exhumation and autopsy be completed “by spring of 2020, given decomposition concerns.”

Gerald Cotten died leaving his customers with next-to-nothing. Or did he? Have we learned nothing from the weirdest, most explosive story of the year?

According to Vanity Fair and the Globe and Mail, Cotten shilled high-yield investment programs as far back as 2003 before starting his own pyramid scheme in 2004 at the age of 15. He first met Quadriga co-founder Michael Patryn, otherwise known as convicted fraudster Omar Dhanani, on the TalkGold message boards.

Both articles note that Cotten was associated with Liberty Reserve, a money-laundering platform shut down by U.S. authorities in 2008, as well as Midas Gold Exchange, which Patryn is affiliated with.

Vanity Fair argues that Cotten is still alive, and that Quadriga’s collapse was only the latest in a long series of successful exit scams. And Nathaniel Rich, the article’s author, is not alone in thinking that. Creditors want to know if Cotten’s body is really in the ground and if he really succumbed to complications due to Crohn’s.

[Prepper456]

is this bitcoin? is it safe? anyone using it anymore now?

[FreeLancer]

is this bitcoin? is it safe? anyone using it anymore now?

Bitcoin is only as safe as your ability to safeguard electronic secrets, which is extremely difficult and the big reason why people take the path of least resistance keep it all on an exchange.  Anyone who's using the same password on multiple websites shouldn't be in crypto.

It's used primarily for illicit transactions at this point, but most are speculative hoarders (known as HODLERS).