The late founder and CEO of the embattled cryptocurrency exchange QuadrigaCX, Gerald Cotten, could have stored users’ funds in paper wallets hidden inside a safe deposit box, as he revealed to doing so in the past.
As reported by the Vancouver Sun, Cotten revealed in a February 2014 interview that losing access to a bitcoin wallet can be dangerous, as it’s “like burning cash in a way.” Per Cotten’s words, the funds could become irretrievable. He stated:
Even the U.S. government, with the biggest computers in the world, could not retrieve those coins if you’ve lost the private key. It’s impossible to retrieve those.
Notably, QuadrigaCX claims to be locked out of $145 million worth of cryptocurrency it owes users, as after Cotten unexpectedly passed away in India in December of last year, no one was able to access its funds in a cold storage wallet. The entrepreneur reportedly ran QuadrigaCX off of his laptop.
While it isn’t known whether Cotten has changed his procedures since 2014, the founder of the exchange revealed he used to store BTC in paper wallets as it’s a “great way to store your bitcoins.” Speaking to the “True Bromance Podcast,” he noted QuadrigaCX was holding crypto for its users, and added:
So what we do is we actually store them offline in paper wallets, in our bank’s vault in a safety deposit box because that’s the best way to keep the coins secure.
Per Cotten this meant that even if hackers managed to access the exchange’s backend, the funds would be safe as they were stored in a safe deposit box.
QuadrigaCX’s Situation
While it isn’t clear whether Cotten changed his method, it’s clear that 115,000 of his businesses’ users have lost funds after he passed away. The exchange has since been granted creditor protection while it handles the situation.
Recently, a Nova Scotia Supreme Court saw “over a dozen” lawyers pitch to represent Quadriga’s creditors, a move that saw the judge revealed he would issue a written decision on it “within a week.”
At least one cryptocurrency enthusiast has lost his $420,000 life savings on the cryptocurrency exchange, as he transferred the funds to it to try to get them to Canada from the US. Researchers have notably found little or no evidence QuadrigaCX had funds in cold storage, raising questions about the incident.