The unfortunate death of QuadrigaCX founder Gerald Cotten was felt throughout the greater cryptocurrency industry. Per previous reports, the Vancouver-based exchange lost access to approximately C$190 million worth of crypto funds held in cold storage, with the passwords known only to the late Cotten himself.
A later affidavit from the entrepreneur’s wife stated that she was unable to access Cotten’s laptop herself, with attempts to decrypt the laptop proving unsuccessful.
“Strong Possibility” of Ethereum Funds Located
James Edwards, the editor of the blockchain analytics blog Zerononcense, has released an in-depth article detailing the possible locations of the missing Quadriga Ethereum funds. A possibility exists of funds being held on rival exchanges Kraken, Poloniex, and Bitfinex.
CEO of San Francisco-based Kraken, Jesse Powell, has denied the possibility of the defunct exchange’s funds being held on Kraken. Despite this, the report shows evidence of Ethereum being stored in the three exchanges while Quadriga was in operation. Powell has since then offered a reward of US$100,000 for information leading to the lost QuadrigaCX reserves.
The juvenility of cryptocurrency exchanges signifies the Canadian court system being left with precedents to set on the handling of cryptocurrency funds and exchanges in future cases. Nevertheless, this case proves a notable example of the hazards of improper checks and balances within a corporation, especially one handling the finances of third parties.
The likely existence of over half of the reserve, even held in another exchange, allows the creditors of the exchange to rest easy as this also indicated the possibility of other Cotten accounts containing the remaining reserves.
If Edwards’ analysis of the missing Ethereum is accurate, this leaves the rival exchanges able to transfer the funds to the courts, resolving the matter of the lost crypto and relieving those affected. However, Poloniex and Bitfinex have yet to respond to the statement, leaving the imbroglio and the ongoing lawsuits unresolved and the future of the funds still up in the air.
Auditor Find Quadriga Cold Wallets Empty
Interestingly, Edwards’ search into the missing Ethereum comes at the same time as the court-appointed investigation has delved into the contents of the missing cold wallets.
Per Bloomberg, an investigation into the funds ordered by the Canadian court has discovered six cold wallets previously used by Quadriga, with another three cold wallet addresses potentially leading back to Quadriga.
During the investigation, ‘Big Four’ auditor Ernst & Young then discovered during its investigation that five of the six wallets had been left unused with April of 2018, with the sixth wallet used solely to transfer cryptocurrency from other exchanges into Quadriga’s hot wallet. Analysis of the three additional cold wallets is in progress, with no updates at the time of writing.
A further 14 user accounts connected to Quadriga were identified by Ernst & Young, with artificially-created deposits used for trading. The court-appointed auditor has reached out to 14 exchanges, and has stated that four responses had been received at the time of writing. As of yet, no exchanges have been named publicly by the auditor.
Photo by Two Paddles Axe and Leatherwork on Unsplash