BitCoin Scam

BitCoin Scam

Camilo Zeballos, Reporter

The owner of QuadrigaCX , one of the largest crypto-currency exchanges in Canada, died and with him supposedly went the key to millions of dollars worth of crypto-currency.

Gerald Cotten, owner of QuadrigaCX, died on December 9th in India due to complications relating to Crohn’s disease. This death means that the exchange now has no way of paying costumers since all the money was left in a cold wallet that Mr. Cotten had the only key to. His wife in an affidavit said, “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.”

According to an article on MSN, this has left many people questioning the company and its true nature. Many people find it odd that only one person would hold the key to a cold wallet holding that amount of money. A cold wallet is, “not connected to the internet and accessible to only people who knew the private keys, or passwords.”MSN also said many other large exchanges using these cold wallets have multiple people with the key to preventing this very thing from happening. Erik Wilgenhof Plante, the CCO at the exchange BeQuant, told The Independent, “Using a reputable custodian to hold the private keys outside the company is perhaps the best option to ensure these codes are not lost,” he goes on to add, “Following this news, there’s likely to be a large amount of scrutiny on Quadriga, in case someone does hold the private key and attempts to siphon the funds. There is a clear lesson here that having a single person owning this information creates a huge vulnerability; they are not only risking huge amounts of money being lost in the event of their death but also pose a huge risk for kidnapping by people wishing to steal or use blackmail to obtain the coin.” Many people also noticed that during the recent month they were having difficulties withdrawing their money and an investigative report by ZeroNonsense said, “It appears that QuadrigaCX was using deposits from their customers to pay other customers once they requested their withdrawal; It does not appear that QuadrigaCX has lost access to their bitcoin holdings. It appears the number of bitcoins in QuadrigaCX’s possession is substantially less than what was reported.”

Also during the same investigation, it was found that there was no connection to any cold wallets anywhere in any account or with the company in general. Furthermore, it is interesting to note that there were exchanges done after the supposed death of Mr. Cotten. and people want to know how this is if they key holding all those millions of dollars were lost with his death.

Investigations are still going, but as of right now it appears that the company might have been running some type of Ponzi scheme, and many people are actually hoping for this now. To them, it beats the alternative of a poor decision leading to millions of dollars lost.