David Raymond Amos @DavidRayAmos
https://www.cbc.ca/news/canada/british-columbia/quadrigo-cryptocurrency-bitcoin-exchange-gerald-cotten-death-india-1.5002955
Sudden death of cryptocurrency leader sends Quadriga into tailspin, panicking clients
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Commenting is now closed for this story.
David R. Amos
Surprise Surprise Surprise
David R. Amos
Methinks folks are beginning to realize that cryptocurrency was just a flash in the pan N'esy Pas?
David R. Amos
@David R. Amos If folks are curious as to why I posted so many replies simply Google the following
"Harper and Bankers"
"Harper and Bankers"
David R. Amos
"Robertson's affidavit says
that assets tallied in those wallets show that Quadriga owes clients
approximately $250-million as of Dec. 17, 2018."
Methinks the lady is being forthcoming Perhaps the courts should ask the lawyers working for CIBC some serious questions for the benefit of Quadriga's clients N'esy Pas?
Methinks the lady is being forthcoming Perhaps the courts should ask the lawyers working for CIBC some serious questions for the benefit of Quadriga's clients N'esy Pas?
Thomas Bruce
Bit-pay is right needs
regulation. I lost money there also. It's hard to find exchanges in
Canada that can convert cryptocurrency into other coins. Since the
banks wont support cryptocurrency we are all in limbo.
David R. Amos
@Thomas Bruce Methinks you
must have understood the game before playing it so there is no need to
cry the blues when you lose N'esy Pas?
Stephen Prokopchuk
I'm sorry, but for $190
million, I'd just brute force it -- but I'd bet my last .0001 BTC a
dictionary attack or rainbow table would get you in with little fuss.
@Stephen Prokopchuk I take it you've never heard of 2FA or MFA
David R. Amos
@Stephen Prokopchuk Good luck trying it
David R. Amos
@ Methinks we should all ask WHO ARE YOU??? N'esy Pas?
Ambrose de la Souse`
what a hoot, these people
give a guy $250 million which he said his company would secure with
blockchain passwords, now he's gone and no one at his company can get
the passwords, biutiful
David R. Amos
@Ambrose de la Souse` Welcome to the Circus
Bob D
YouTube "Bitcoin Bubble Song" You'll see a goofy looking guy in some weird spacesuit.
David R. Amos
@Bob D Methinks I resemble that remark N'esy Pas?
Alan Smithee
Cryptocurrency = Beanie babies for Ayn Rand fanboys.
David R. Amos
@Alan Smithee Methinks
whereas the former Federal Reserve chairman, Alan Greenspan worshiped
Ayn Rand Hence the US Petrodollar = Pure D BS N'esy Pas?
Timmy Thompson
@David R. Amos
Yo! Mi Amigo Amos!
Que pasa with that
chronic "N'esy Pas" nonsense
again ??
Yo! Mi Amigo Amos!
Que pasa with that
chronic "N'esy Pas" nonsense
again ??
Mollie Hemingway
Don't you love these commentators who know nothing about digital current they seem to be afraid of..
The actual scandal is being completely ignored. The big 5 banks are doing anything and everything they can do prevent Digital Currency (Bitcoin) from going mainstream as they know it threatens their very profitable control over the entire monetary system. Bitcoin = Freedom
This entire mess was ACTUALLY created by CIBC freezing cash belonging to hundreds of Canadians with accounts at QuadrigaCX.. CIBC knew exactly what they were doing!! They knew that freezing the Exchanges liquidity it would surely create a catastrophe, and it worked. CIBC are the criminals here!!
For the past 2 years the banks have been pulling all kinds of crap and the now the true victims ( not QCX owners) but the owners of the frozen funds are out their money due to ICBC and now Bank of Montreal's interference.. It will take forever to make everyone whole, and the banks could care less.. Point blank.
The actual scandal is being completely ignored. The big 5 banks are doing anything and everything they can do prevent Digital Currency (Bitcoin) from going mainstream as they know it threatens their very profitable control over the entire monetary system. Bitcoin = Freedom
This entire mess was ACTUALLY created by CIBC freezing cash belonging to hundreds of Canadians with accounts at QuadrigaCX.. CIBC knew exactly what they were doing!! They knew that freezing the Exchanges liquidity it would surely create a catastrophe, and it worked. CIBC are the criminals here!!
For the past 2 years the banks have been pulling all kinds of crap and the now the true victims ( not QCX owners) but the owners of the frozen funds are out their money due to ICBC and now Bank of Montreal's interference.. It will take forever to make everyone whole, and the banks could care less.. Point blank.
David R. Amos
@Mollie Hemingway Methinks many agree with you Perhaps folks should ask why I do N'esy Pas?
Spencer Michaels
Don't store your cryptocurrency in exchanges , use a cold wallet instead
Denis O'Brien
@Spencer Michaels I prefer actual currency in my warm wallet...
David R. Amos
@Denis O'Brien Me Too
Christopher Ball
The moral, don't use cryptocurrency. You have no protection.
David R. Amos
@Christopher Ball Methinks thats what the banksters want folks to think N'esy Pas?
Troy Murschell
The only things bitcoin and
its brethren are useful for are drug deals and human trafficking. When
you get involved in it, that’s who you’re dealing with so you probably
shouldn’t be surprised when you’re scammed or your money gets stolen.
Spencer Michaels
@Troy Murschell really? Then why are major banks investing in the tech?
Vicki S Nemeth
@Spencer Michaels Troy isn't
100% correct, but there is too much functionality for dangerous stuff
like that. Maybe if major banks (not in Russia or China) get involved,
more security will, too.
David R. Amos
@Spencer Michaels Good quetion
Investment banks and hedge funds are always looking for investments that are uncorrelated to the general economy (they are nicknamed LGM investments for ‘little green men’ because what they want is a totally different economy - an alien economy would be perfect). They use these as ‘insurance’ against other transactions - two investments that are totally uncorrelated shouldn’t tank at the same time.
While such a perfectly uncorrelated investment doesn’t exist (witness the 2008 financial crisis), criminal economics (as I said, drugs and human trafficking) while not completely unrelated to the general economy, definitely marches to a different drummer.
That and of course, naked speculative greed, the ability to create and sell novel new products (that is after all what investment banks are at their core - salesmen) and the ability to directly influence the value just because of their size compared to the market size helps too.
David R. Amos
Troy Murschell
@Spencer Michaels
Investment banks and hedge funds are always looking for investments that are uncorrelated to the general economy (they are nicknamed LGM investments for ‘little green men’ because what they want is a totally different economy - an alien economy would be perfect). They use these as ‘insurance’ against other transactions - two investments that are totally uncorrelated shouldn’t tank at the same time.
While such a perfectly uncorrelated investment doesn’t exist (witness the 2008 financial crisis), criminal economics (as I said, drugs and human trafficking) while not completely unrelated to the general economy, definitely marches to a different drummer.
That and of course, naked speculative greed, the ability to create and sell novel new products (that is after all what investment banks are at their core - salesmen) and the ability to directly influence the value just because of their size compared to the market size helps too.
Amma Wifi
@Troy Murschell As a big fan
of scientific process, I really think talking in absolutes from a
non-scientific standpoint is always destructive. Crypto is a new way of
doing finance. It is currently still not as mature as it could be. As
with all immature technologies, the first to adopt it are the sectors of
society for whom the risk is worth it. In the case of crypto, this is
tech enthusiasts, criminals and early-adopters (early adopters being the
ones who do not do their due-diligence and foolishly go all in, then
when it fails they go to the press and give crypto a bad name).
The technology really needs mass adoption for things to really lift but that is unlikely to happen with bitcoin itself as bitcoin has some insurmountable technological limitations. It is likely to come with new crypto coins that have overcome these limitations (an early contender seems to be BCHSV). But don't judge the whole crypto world as a massive failure, but rather something that needs a few extra features in its software before it can live up to the expectations of mass adoption.
The technology really needs mass adoption for things to really lift but that is unlikely to happen with bitcoin itself as bitcoin has some insurmountable technological limitations. It is likely to come with new crypto coins that have overcome these limitations (an early contender seems to be BCHSV). But don't judge the whole crypto world as a massive failure, but rather something that needs a few extra features in its software before it can live up to the expectations of mass adoption.
David R. Amos
I agree
Robert Dziobon
What about individuals who
had cash at Quadriga waiting to be used for Bitcoin? That should not be
lost, right? I hope. What do I do to get it back?
can jacksom
@Robert Dziobon it does when youre bankrupt. they take the rest no matter who it once belonged to
Francis Lee
@Robert Dziobon
It figures that a Leaf fan would be invested in a Ponzi scheme like this. I guess that's what happens when you are desperately hoping for a Stanley Cup for over 50 years - you will "hope" for anything . . .
It figures that a Leaf fan would be invested in a Ponzi scheme like this. I guess that's what happens when you are desperately hoping for a Stanley Cup for over 50 years - you will "hope" for anything . . .
David R. Amos
@Robert Dziobon "What do I do to get it back?"
Better call Saul
Better call Saul
Thomas Bruce
@Francis Lee who won the last game leafs vs Canadians.
David R. Amos
@Thomas Bruce Who cares?
Francis Lee
Can you spell Ponzi?
David R. Amos
@Francis Lee Ponzi
Now can you Google the following?
David Amos Madoff
Now can you Google the following?
David Amos Madoff
alex reti
Sad the guy died, of course.
But it sort of makes for an easier decision on my part. Couldn't choose
between buying a bridge from this guy I know, or buying Bitcoin. Better
go with the bridge now, clearly.
@alex Methinks I know of several bridges that may peak your interest Perhaps we should talk N'esy Pas?
Christiana Zimmerman
originally cryptocurrency
was about only you knowing the password but as usual, people want
convenience and simplicity so they turn over their passwords over to
third-party companies to make transactions easier, might as well get a
credit card or use cash
Robert Dziobon
@Christiana Zimmerman that's
is not what happened. Users don't send their passwords to the exchange.
They send the actual Bitcoin.
1. The users then exchange the Bitcoin for Canadian dollars. OR
2. The leave the Bitcoin at the exchange to trade for other crypto currency.
1. The users then exchange the Bitcoin for Canadian dollars. OR
2. The leave the Bitcoin at the exchange to trade for other crypto currency.
Content disabled.
David R. Amos
@Robert Dziobon "The users then exchange the Bitcoin for Canadian dollars"
Methinks therein lies the rub N'esy Pas?
Methinks therein lies the rub N'esy Pas?
David R. Amos
@David R. Amos "The users then exchange the Bitcoin for Canadian dollars"
Bingo
Bingo
james fryday
One word:Greed.
David R. Amos
@james fryday YUP
Doug Edmunds
If your "money" can be lost by simply unplugging something, it's not looking like "sound" investing.
David R. Amos
@Doug Edmunds True
Erik Bosma
First mtGox and now
Quadriga... I just can't get a break and am getting tired of donating
money to crypto exchanges. Wanna get rich? Start a crypto exchange and
then after a couple of years abscond with the currency. Only the
blockchain knows.
can jacksom
@Erik Bosma your problem isnt
the exchanges. its the crypto business. if you were lucky to cash out
at the boom you are smart. any further loss is your fault entirely
can jacksom
@Erik Bosma always keep a hardware wallet....
David R. Amos
@can jacksom YUP
David Baker
The Government should NOT be
involved in GREED! period! Why the hell is it the tax payers fault that
people are greedy and do not want to do things the conventional way?
GREED! lol looks good on them ! lol
Christiana Zimmerman
@David Baker people are greedy people are generous... both are true
David R. Amos
@David Baker Welcome to the Circus
David R. Amos
@Christiana Zimmerman True However methinks he with the gold makes the rules N'esy Pas?
Arthur Seamon
Having lost 90000 on a
"Legitimate investment" nothing surprises me. Canadian regulators
regulate nothing. The investment business is made for the investment
companies and the banks. The poor Canadian invester is just a sucker to
fill their pockets.
David R. Amos
@Arthur Seamon Oh So True
michael Wynne
if it seems to good to be
true then stay away, Bitcoin is a fad with no real value except one
people are told to believe is true. Good luck with getting any money
back
David R. Amos
@michael Wynne Methinks I should ask is your opinion to Good to be True N'esy Pas?
James Barnsley
Not your keys, not your Bitcoin.
David R. Amos
@James Barnsley Methinks its not a coin if I can't flip it and see a head and a tail N'esy Pas?
Stanley Kerr
If you want to invest in very
high risk investments such as this stuff be prepared to loose big
time...Not too much sympathy will coming from the general public here...
David R. Amos
@Stanley Kerr I agree
John English
I am absolutely shocked that yet another Bitcoin company is embroiled in controversy.
David R. Amos
@John English Methinks thou doth jest too much N'esy Pas?
B Russell
This story has not even begun
to be told. There are tools and many individuals looking at this
including other exchanges that hold QCX former client wallets. If this
is a scam, it wont be long before its confirmed. I hope that the many
clients who have crypto on QCX can get squared with this mess.
Not good for the bitcoin industry in Canada but a lesson that has been repeated for years. Dont leave bitcoin on exchanges. Good luck to everyone.
Not good for the bitcoin industry in Canada but a lesson that has been repeated for years. Dont leave bitcoin on exchanges. Good luck to everyone.
David R. Amos
@B Russell YUP Methinks the fat lady has not sung yet N'esy Pas?
Ian Malcomson
Currencies that do not play by any transparent rules are rogue. Anyone playing in this world is really taking a risk.
David R. Amos
@Ian Malcomson YUP
Eric Levert
From a Reddit post; this is a confirmation that I was probably pretty close with my earlier comment...
This post identifies the litecoin cold wallets that Quadriga uses. Funds are being moved out... this means that the private keys are in fact not "lost" and we're being played. Gerald or someone else with the private keys are literally moving our money out as we speak.
Have a look at the timestamped movements in these wallets..........
This post identifies the litecoin cold wallets that Quadriga uses. Funds are being moved out... this means that the private keys are in fact not "lost" and we're being played. Gerald or someone else with the private keys are literally moving our money out as we speak.
Have a look at the timestamped movements in these wallets..........
Robert Dziobon
@Eric Levert can you show
link to Reddit post? Has the online community identified the Quadriga
ledgers on the blockchain? Or are there too many?
David R. Amos
@Robert Dziobon Try Googling "Harper and Bankers" sometime
Mark Sinclair
Gerald Cotten was a scam artist. He is in a good place now.
Erik Bosma
@Mark Sinclair
Yeah, in a mansion in India with a quarter of a billion.
Yeah, in a mansion in India with a quarter of a billion.
David R. Amos
@Mark Sinclair @Erik Bosma Methinks his widow may disagree with your opinions N'esy Pas?
Eric Levert
Who need Netflix with a story
like this ? Did he buy a death certificate, then a new passport in
India for 12,000$ to run with millions ? Did he get killed after being
forced to give the cold wallet passwords ? How much is a company like
this worth in 2019, in 2018, 2017 it was a fantastic corporation to
own... And probably still have value if the reputation can be repaired ?
The problem with crypto currency is not technical ....it s
humain.....the good news is, I do not believe he died ? Maybe we will
know more when Netflix sign him up for a 190 mil$ film about his life
Sheldon Irving
@Eric Levert Maybe they need to demand they ship back the body as proof?
David R. Amos
@Sheldon Irving Good question
Wendy taylor
Syphoning enough kWh to power
a small city, the bitcoin has to die. Soon. Empty houses are stuffed
to the rafters with servers that process bitcoin transactions and
produce incredible amount of heat as waste. . There are entire islands
of hardworking people may only get a couple of hours of electricity per
day, to run construction equipment, to keep a business going and pay
workers. WE are an incredibly wasteful nation, latching on to the
easiest way to make a .. bitcoin. Which hopefully will become
absolutely worthless.
B Russell
@Wendy taylor CIBC has 44,000
employees, RBC 81,000, Scotiabank 88,000. how much electricity do
you think those banks use to maintain their computers for staff and and
additional servers of all operations? Include the other top tier
Canadian banks, the other institutuins, the US Banking industry, the
rest of the world and youll see that bitcoin uses nothing in comparison.
Hope that helps.
Jennifer McIsaac
@B Russell
But any wastage is wastage and we can certainly do without bit coin mining.
But any wastage is wastage and we can certainly do without bit coin mining.
Robert Dziobon
@B Russell I see it more like this ...
If I go to the bank to get a draft cheque it takes 20 minutes for the teller to process it. I pay $7.50. Then I go to the bank across the street and wait 20 minutes in line to deposit it. Even after depositing it, the bank still puts a hold on the funds even though it's a draft.
I'm not saying Bitcoin is the solution. But this entire transaction should really take 10 seconds and cost $0.05. Blockchain can do this. We just have to figure out the best way.
If I go to the bank to get a draft cheque it takes 20 minutes for the teller to process it. I pay $7.50. Then I go to the bank across the street and wait 20 minutes in line to deposit it. Even after depositing it, the bank still puts a hold on the funds even though it's a draft.
I'm not saying Bitcoin is the solution. But this entire transaction should really take 10 seconds and cost $0.05. Blockchain can do this. We just have to figure out the best way.
Sheldon Irving
@Wendy taylor What about
plastic water bottles. Do you realize hw much of the ocean is full of
micro plastics? We have other environmental issues other then just
bitcoin power usage.
Sheldon Irving
@Wendy taylor Any time a new
technology comes out it can be wasteful, it takes a while before its
more refined. A good way to curb mining power usage is stop giving
miners discounts on electricity. THis will help curb energy usage.
David R. Amos
@Sheldon Irving "We have other environmental issues other then just bitcoin power usage."
Methinks this news should have made everyone sit up and pay attention Fish food is one very important thing but plankton also provide most of the world's oxygen N'esy Pas?
https://www.cbc.ca/news/canada/newfoundland-labrador/ocean-phytoplankton-zooplankton-food-web-1.4927884
Methinks this news should have made everyone sit up and pay attention Fish food is one very important thing but plankton also provide most of the world's oxygen N'esy Pas?
https://www.cbc.ca/news/canada/newfoundland-labrador/ocean-phytoplankton-zooplankton-food-web-1.4927884
Jim Redmond
I would never buy those kryco things anyway. It's like Los Vegas.
David R. Amos
@Jim Redmond I prefer Vegas
Robert Ross
Elvis Cavalic of Calgary said that he bought a few hundred dollars of bitcoin using Quadriga's platform.
When he tried to withdraw $15,000 in his account in October, he could not.
"This is a tough lesson learned. I would probably avoid [cryptocurrency] in the future," said Cavalic.
"I'm kind of preparing for the worst."
That wouldn't matter for any funds held, either in cash, in bonds, or in a bank. The whole system is questionable - history should have taught people that lesson.
I am not pro-bitcoin, or any crypto-currency advocate.
When he tried to withdraw $15,000 in his account in October, he could not.
"This is a tough lesson learned. I would probably avoid [cryptocurrency] in the future," said Cavalic.
"I'm kind of preparing for the worst."
That wouldn't matter for any funds held, either in cash, in bonds, or in a bank. The whole system is questionable - history should have taught people that lesson.
I am not pro-bitcoin, or any crypto-currency advocate.
David R. Amos
@Robert Ross "That wouldn't
matter for any funds held, either in cash, in bonds, or in a bank. The
whole system is questionable - history should have taught people that
lesson."
I Wholeheartedly Agree Sir
I Wholeheartedly Agree Sir
Jordan Anderson
Well said by the Bitbuy.ca guys
David R. Amos
@Jordan Anderson Why?
Henry Savage
You have to read other articles to get more of a clear understanding of this story.
Apparently only the deceased knew the passwords for the cold wallets that contain all the funds (if the funds actually still exist)
so that is a huge problem, perhaps unsolvable
The company actually won the court judgment and got the disputed funds returned to them
I notice a lot of CBC articles are missing really important information.
Sometimes it really skews how it reads, giving a much different impression
Apparently only the deceased knew the passwords for the cold wallets that contain all the funds (if the funds actually still exist)
so that is a huge problem, perhaps unsolvable
The company actually won the court judgment and got the disputed funds returned to them
I notice a lot of CBC articles are missing really important information.
Sometimes it really skews how it reads, giving a much different impression
Friday Jones
@Henry Savage
That is a problem with CBC... their main source is often Twitter... and the replies which they treat as confirmation. It's hard to find real news...
That is a problem with CBC... their main source is often Twitter... and the replies which they treat as confirmation. It's hard to find real news...
David R. Amos
@Friday Jones YUP
Daniel Rawlins
Well then! I guess that's the difference between 'virtual money' and 'reality money'; thankfully I'm A realist.....
David R. Amos
@Daniel Rawlins Me Too
George Hancock
"...more than 115-thousand clients..."
Is it assumed that we are unable to understand 115,000?
Is it assumed that we are unable to understand 115,000?
lee smith
@George Hancock i agree with
your comment, but unfortunately among the no thinking people, there are
some who would not understand
Danny Chasko
@George Hancock ihave met
people who are so called educated who cant understand what big
numbers mean;like how many people in canada 35000000 needs commas
but they cant do it
Matt Taylor
@Danny Chasko
The commas were dropped when we switched to the metric system and use a space instead.35,000,000 is written 35 000 000.
The commas were dropped when we switched to the metric system and use a space instead.35,000,000 is written 35 000 000.
David R. Amos
@George Hancock YUP
David R. Amos
@Matt Taylor Methinks the
Yankee Banksters playing this wicked game with the CIBC, the TD Bank and
all the others don't care about the metric system or commas or spaces
as long as the money stays green and is overseen by the Yankee Federal
Reserve System and the Bank of International Settlements etc N'esy Pas?
Sudden death of cryptocurrency leader sends Quadriga into tailspin, panicking clients
‘They’ve left us completely in the dark. I’m kind of preparing for the worst’ says customer
Canada's largest cryptocurrency
exchange has filed for creditor protection in Nova Scotia, leaving
thousands of fearful customers with frozen assets and scant information.
This comes in the wake of financial and legal troubles with the five-year-old B.C-based exchange platform — and news that its 30-year old founder, Gerald Cotten, died unexpectedly last December in India.
On Jan. 31, QuadrigaCX announced it had filed an application in the Supreme Court of Nova Scotia for creditor protection, after months of transaction delays.
Cryptocurrency leaders were shaken.
The volatile industry is already plagued by a lack of consumer confidence, said Dean Skurka, a vice president at Bitbuy.ca, a platform for buying virtual currency.
"This really highlights the need for the government to take action and regulate cryptocurrency exchanges," Skurka said in an interview from Toronto.
Digital
currency experts say news of troubles at Canadian-cryptocurrency
platform QuadrigaCX is shaking confidence in the emerging industry. (Gillian Flaccus/Associated Press)
Bitbuy.ca
president Adam Goldman said he met Cotten, Quadriga's founder, years
ago in Toronto at the launch of the first bitcoin ATM.
"He was a quiet, serious guy with big plans ...an honest guy," he said.
Skurka said he was saddened to hear the company had devolved into a tailspin, and then tragedy.
Troubles began when CIBC took legal action and froze almost $26-million of Quadrigo's funds in early 2018.
According to court documents, the bank alleged that money from 465 deposits was held in accounts belonging to the exchange's payment processor, Costodian Inc., and owner Jose Reyes.
The bank alleged it was unable to determine who the money belonged to and began investigating.
Then, early this year, a post appeared explaining that on Dec. 9, Cotten had died while working in an orphanage in India.
Global Affairs Canada confirmed that a Canadian had died in India and they had provided assistance to the family but, under the Privacy Act, could offer no more.
In an affidavit filed in B.C. Supreme Court as part of probate proceedings on Jan. 31, Cotten's widow, Jennifer Robertson, described trying to cope with corporate issues after Cotten's death.
She described people posting inaccurate speculation on social media about "whether he is really dead."
The affidavit said Robertson was left searching the couple's Nova Scotia home and Cotten's encrypted laptop for business records and missing coins.
Digital
currency like bitcoin and ethereum are not real coins. They only exist
online and fears that $70-million worth of deposits might be
inaccessible make Quadriga clients nervous. (Rick Bowmer/Associated Press)
She
described hiring a security expert to help recover information about
the Quadriga Fintech Solutions Corp. and several other associated
companies Cotten had registered in B.C.
She said Cotten's companies had more than 115-thousand clients who had invested assets worth $70-million, which she estimates had grown to $250-million by December 2018.
As executor of Cotten's estate and owner of 43 per cent of the company's shares, Robertson filed a petition in civil court in B.C. on Jan. 22 describing a "rare and exceptional situation."
It said the company was left with no officers, directors or office space.
"Most of the business was being conducted by Gerry wherever he and his computer were located."
And then there were the locked digital wallets.
Any user who wants to transfer bitcoin requires a wallet — located on a server.
So-called hot wallets are for live transactions — while so-called cold wallets are for storage to keep coins safe from hackers.
Robertson's affidavit says that assets tallied in those wallets show that Quadriga owes clients approximately $250-million as of Dec. 17, 2018.
But court documents say the company can only access "hot" wallets at this time.
Nearly a year before Cotten died in December 2018, the company had legal trouble.
In January of that year, CIBC froze $26-million-worth of assets after finding irregularities with payment processing.
A 2018 Ontario Superior Court of Justice document says $67-million worth of transactions ended up improperly transferred into the personal account of Costodian Inc, the payment processor.
But Quadriga alleged the bank was wrong and only targeted the exchange because of mistrust of virtual currencies and called fears "that there must be shady dealings afoot" offensive and unsubstantiated.
Elvis Cavalic of Calgary said that he bought a few hundred dollars of bitcoin using Quadriga's platform.
When he tried to withdraw $15,000 in his account in October, he could not.
"This is a tough lesson learned. I would probably avoid [cryptocurrency] in the future," said Cavalic.
'"They've left us completely in the dark. I'm kind of preparing for the worst."
CBC reached out to lawyers for CIBC and Robertson for comment but did not receive a response by deadline.
This comes in the wake of financial and legal troubles with the five-year-old B.C-based exchange platform — and news that its 30-year old founder, Gerald Cotten, died unexpectedly last December in India.
On Jan. 31, QuadrigaCX announced it had filed an application in the Supreme Court of Nova Scotia for creditor protection, after months of transaction delays.
Cryptocurrency leaders were shaken.
The volatile industry is already plagued by a lack of consumer confidence, said Dean Skurka, a vice president at Bitbuy.ca, a platform for buying virtual currency.
"This really highlights the need for the government to take action and regulate cryptocurrency exchanges," Skurka said in an interview from Toronto.
"He was a quiet, serious guy with big plans ...an honest guy," he said.
Skurka said he was saddened to hear the company had devolved into a tailspin, and then tragedy.
Frozen funds
Troubles began when CIBC took legal action and froze almost $26-million of Quadrigo's funds in early 2018.
According to court documents, the bank alleged that money from 465 deposits was held in accounts belonging to the exchange's payment processor, Costodian Inc., and owner Jose Reyes.
The bank alleged it was unable to determine who the money belonged to and began investigating.
Then, early this year, a post appeared explaining that on Dec. 9, Cotten had died while working in an orphanage in India.
Global Affairs Canada confirmed that a Canadian had died in India and they had provided assistance to the family but, under the Privacy Act, could offer no more.
Encrypted laptop
In an affidavit filed in B.C. Supreme Court as part of probate proceedings on Jan. 31, Cotten's widow, Jennifer Robertson, described trying to cope with corporate issues after Cotten's death.
She described people posting inaccurate speculation on social media about "whether he is really dead."
The affidavit said Robertson was left searching the couple's Nova Scotia home and Cotten's encrypted laptop for business records and missing coins.
She said Cotten's companies had more than 115-thousand clients who had invested assets worth $70-million, which she estimates had grown to $250-million by December 2018.
As executor of Cotten's estate and owner of 43 per cent of the company's shares, Robertson filed a petition in civil court in B.C. on Jan. 22 describing a "rare and exceptional situation."
It said the company was left with no officers, directors or office space.
"Most of the business was being conducted by Gerry wherever he and his computer were located."
And then there were the locked digital wallets.
The wallets
Any user who wants to transfer bitcoin requires a wallet — located on a server.
So-called hot wallets are for live transactions — while so-called cold wallets are for storage to keep coins safe from hackers.
Robertson's affidavit says that assets tallied in those wallets show that Quadriga owes clients approximately $250-million as of Dec. 17, 2018.
But court documents say the company can only access "hot" wallets at this time.
Troubles blamed on banks
Nearly a year before Cotten died in December 2018, the company had legal trouble.
In January of that year, CIBC froze $26-million-worth of assets after finding irregularities with payment processing.
A 2018 Ontario Superior Court of Justice document says $67-million worth of transactions ended up improperly transferred into the personal account of Costodian Inc, the payment processor.
But Quadriga alleged the bank was wrong and only targeted the exchange because of mistrust of virtual currencies and called fears "that there must be shady dealings afoot" offensive and unsubstantiated.
Clients frustrated
All this caused delays.Elvis Cavalic of Calgary said that he bought a few hundred dollars of bitcoin using Quadriga's platform.
When he tried to withdraw $15,000 in his account in October, he could not.
"This is a tough lesson learned. I would probably avoid [cryptocurrency] in the future," said Cavalic.
'"They've left us completely in the dark. I'm kind of preparing for the worst."
CBC reached out to lawyers for CIBC and Robertson for comment but did not receive a response by deadline.
Corrections
- A previous version of this story said Dean Skurka met Gerald Cotten personally in Toronto. In fact, it was Bitbuy.ca president Adam Goldman who met Cotten.Feb 03, 2019 12:36 PM PT
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$190-million missing after crypto exchange Quadriga CEO dies
February 01, 2019Quadriga Fintech Solutions Corp., which owns and operates the exchange, is facing a “liquidity crisis” and has only $375,000 in cash while owing the equivalent of more than $260-million to approximately 92,000 users, according to an application for relief under the Companies’ Creditors Arrangement Act (CCAA) filed in the Nova Scotia Supreme Court. Quadriga is seeking to appoint Ernst & Young Inc. as a monitor.
The company has been unable to locate and access about $190-million worth of cryptocurrency, which includes bitcoin and Ethereum, since co-founder and sole director Gerald Cotten, 30, died on Dec. 9. Mr. Cotten was diagnosed with Crohn’s disease at age 24 and passed away due to complications from the condition while travelling in India, according to court documents. According to a statement on Quadriga’s website posted more than a month after his death, Mr. Cotten was in the country to open an orphanage.
Quadriga, which launched in 2013, kept the majority of its cryptocurrency in what’s known as “cold wallets,” essentially an offline storage system that protects the funds from hacking and theft. Mr. Cotten had sole responsibility for handling the funds and held the digital security keys to access the wallets, which the company attempted to find after his death. “Quadriga was unable to access the cold wallets and/or discovered that the cold wallets contained minimal cryptocurrency units,” according to a report filed with the court by Ernst & Young.
Mr. Cotten mostly ran the business on his own from his laptop wherever he happened to be, which was typically in a house he shared with his wife in Nova Scotia. Mr. Cotten’s primary laptop is encrypted, according to an affidavit filed by his widow, Jennifer Robertson. “I do not know the password or recovery key,” she said in the affidavit. “Despite repeated and diligent searches, I have not been able to find them written down anywhere.”
She also searched their home and other properties for any company documents, but came up empty. Ms. Robertson hired an outside tech expert to attempt to “hack into Gerry’s computers” in addition to an encrypted USB key. The expert had some luck retrieving a few digital coins and some information from Mr. Cotten’s cellphones and another computer, but the effort has mostly been unsuccessful, the affidavit says.
Ernst & Young argued in its report that creditor protection is necessary to permit an investigation into the missing coins and determine the amounts owing to users, noting that Quadriga’s “accounting systems either do not exist or are not capable of recording and producing even the most basic of accounting summaries.” If approved as a monitor, the company will also determine if a sale of Quadriga is possible.
Operators of other Canadian cryptocurrency exchanges called it highly unusual for a single executive to be the only one with access to the company’s funds. That would have made Mr. Cotten - who was well known in the cryptocurrency community and an avid traveller - vulnerable to being kidnapped or extorted, said Michael Gokturk, CEO of Vancouver-based Einstein Exchange.
“It’s the equivalent of walking around with millions of dollars in cash on you at all times,” Mr. Gokturk said.
Mr. Cotten was diligent in other areas of his life. He signed a will on Nov. 27, less than two weeks before he died. He appointed Ms. Robertson as the executor of his estate and outlined the distribution of his assets, including an airplane, property in British Columbia and Nova Scotia, and two pet chihuahuas named Nitro and Gully, along with $100,000 for their care.
Another portion of Quadriga’s funds is tied up with third-party payment processors. The company had difficulty obtaining accounts with Canadian banks, and last year the Canadian Imperial Bank of Commerce froze approximately $25.7-million held in an account belonging to one of Quadriga’s payment processors. The funds were eventually paid by CIBC to the Ontario Superior Court of Justice, which transferred the money to the payment processor, Costodian Inc., in the form of bank drafts. Neither Costodian nor Quadriga has been able to find a bank to accept the drafts, however.
Users have been complaining over the course of the past year about difficulties withdrawing money from the exchange. The Globe has spoken to several of these clients, some of whom experienced months of delays trying to withdraw tens of thousands of dollars. None of them wished to be identified due to privacy concerns. The largest individual user account balance is valued at $70-million.
Quadriga continued accepting deposits for weeks after Mr. Cotten’s death. Ms. Robertson, as executor of his estate, filed for an application in B.C. to hold an emergency meeting on Jan. 25 to appoint board directors. Following the meeting, the board decided to take down Quadriga’s trading platform on Jan. 28.
Ms. Robertson’s affidavit notes there has been a significant amount of comment on Reddit and other forums about Quadriga, including speculation about whether Mr. Cotten is actually dead. (The CCAA filings contain a statement of death issued by J.A. Snow Funeral Home in Halifax.) “There have also been threats made against me,” she said. “Slanderous comments have been made against me and sent through Facebook messenger to my entire contact list.” Ms. Robertson is personally funding the costs of the CCAA proceedings, according to her affidavit.
A preliminary hearing is scheduled for Feb. 5.
Exchange operators say Quadriga’s inability to retrieve the funds points to a need for greater regulatory oversight of their industry. Although most exchanges claim to have security protocols in place to protect client funds, such measures are not mandated by any Canadian regulator.
“Exchanges have not really had to report to any regulator on the way in which they run their business,” said Cole Diamond, chief executive of Canadian cryptocurrency company Coinsquare.
“That’s why you’re seeing
the problem that we’re seeing here today with Quadriga.”
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