QuadrigaCX ‘Inadvertently’ Sent Bitcoin to Dead CEO’s Wallet: EY Report

More than $400,000 in QuadrigaCX cryptocurrency disappears into 'cold wallet'

QuadrigaCX ‘Inadvertently’ Sent Bitcoin to Dead CEO’s Wallet: EY Report

In an initial report published Tuesday on Quadriga's progress since it filed for creditor protection in late January, court-appointed monitor Ernst and Young (EY) said that the company accidentally moved more than 100 bitcoins into a cold storage wallet it can not access. Cryptocurrency exchanges often keep some of their assets in offline storage locations, referred to as cold wallets, to protect them from hackers.

Founder Gerald Cotten died in India a year ago, but as Mashable reports, an affidavit filed by Cotten's widow Jennifer Robertson reveals the company sent more than one hundred bitcoin to the inaccessible wallet despite knowing it couldn't be accessed.

His widow, Jennifer Robertson, has said in court documents that Cotten was the only person with access to his laptop, which is thought to contain the digital keys to the cold wallets containing the missing cryptocurrency.

However, on February 6, - the day after the exchange was given 30 days to find a way into their cold wallets - 103 of the 154 bitcoins stored in hot wallets were "inadvertently transferred ... to Quadriga cold wallets which the Company is now unable to access". Ernst & Young does not specify in the report which of the company's contractors transferred the funds.

The report continues, "The monitor is working with [QuadrigaCX] management to retrieve this cryptocurrency from the various cold wallets, if possible".

At the end of last week, Reuters reported that the British Columbia Securities Commission, the province's securities regulator, would not be investigating the QuadrigaCX situation as the authority did not believe the exchange was trading in securities.

To avoid future crypto-catastrophes, Ernst and Young plans to transfer QuadrigaCX's remaining cryptocurrency to another cold wallet that the professional services firm can access.

The Canadian court that has placed QuadrigaCX into administration has been handed "two active laptops, two older model laptops, two active cellphones, two dead cellphones and three encrypted USB flash drives", and will also seek to seize a desktop device from Cotten's home office. The devices are being held in a safety deposit box rented by EY.

The next court hearing will be on February 14, to appoint a lawyer to represent the creditors.

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