Quadriga Exchange Founder Filed A Will 12 Days Before Dying – Report

Investing, News, Regulation | February 6, 2019 By:

The curious case of Quadriga is getting even more strange, as some are contending that small amounts of crypto are being moved out of the exchange’s cold wallets. Adding to the intrigue is news that Canadian entrepreneur Gerald Cotten, age 30, filed a will just 12 days before dying in India from complications from Crohn’s disease.

As a result of his untimely death, Canada’s biggest cryptocurrency exchange currently has an estimated $145 million in funds locked. Cotten’s widow, Jennifer Robertson, claims that the passwords to the laptop used to run the system can’t be found, and experts have yet to be able to unlock the system. The company doesn’t have sufficient funds on hand to help those who have holdings at Quadriga and has filed for creditor protection.

“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets,” Quadriga said in a statement on its website. “Unfortunately, these efforts have not been successful.”

Robertson said in an affidavit that she has no information. “I do not know the password or recovery key,” she said. “Despite repeated and diligent searches, I have not been able to find them written down anywhere.”

Quadriga is based in Vancouver. The Nova Scotia courts have appointed financial services firm Ernst & Young as an independent monitor that will oversee Quadriga’s efforts to resolve its financial problems.

Ben Wilkening, director of strategic partnerships at Token IQ, answered a few Block Tribune questions on the growing incident:

BLOCK TRIBUNE: Do you believe the Quadriga story happened the way it is being presented?

BEN WILKENING:  With the scope of evidence that has yet been provided, there seems to be something to this story that does not meet the eye; and is certainly very dubious. Just today, there was new evidence brought to light that the former CEO filed and signed paperwork for his last will and living trust only 12 days prior to his death. This, coupled with the movement of funds, since his death (when it is being reported that the access to the private keys for the exchange’s wallets were lost, upon his death) would seem to suggest that there is high potential for misdeed with this story.

BLOCK TRIBUNE:  Have you ever heard of a similar instance where crucial information was only held by one company officer?

BEN WILKENING: Unfortunately, I have seen many examples of companies engaging in careless risk assessment and entrusting far too much critical collateral to certain individuals. The instances which I am most familiar with, typically don’t come in the form of a sole custodian being the bottleneck for access of funds, but are still catastrophic in their implications, nonetheless. What I have seen too often on various projects I have been party to, is that companies will entrust intellectual property or company trade secrets about the operation of antiquated technology to a single soul, and go to great ends and vast expenditure to mitigate the risk of that individual dying unduly on business trips or off site implementations etc, rather than spend the money to upgrade their technology to eliminate the risk. Luckily, distributed ledger technology also offers a promise to rectify pain points of that variety as well!

BLOCK TRIBUNE: What will happen next? Is there a way to recover the missing funds?

BEN WILKENING: This is an interesting question to ponder and the real answer is: “we shall find out!” While it will be impossible to recover the private keys by way of any technological means (it is, after all, an immutable blockchain where the wallet funds are stored) the storage addresses in which these funds were held will now be watched like a hawk. In fact, there has now been a network wide investigation conducted into the matter, whereby which the crypto-investigator community has turned up evidence of activity in some of the Litecoin holdings of Quadriga, since the alleged death of the former CEO. These had been claimed to be frozen because of loss of access, but have since moved or changed hands, suspiciously, with no answers. Quadriga retaining Ernst & Young on the matter will eventually lead to a public disclosure of the exchange’s wallet addresses. Frankly, from this stage on, there is precedent for the legal authorities being able to use the transparency afforded on any requisite distributed ledger for benevolent reasons; in this case to investigate a crime. In the past, federal investigators’ efforts have been able to track and validate movement of funds, similarly, on the bitcoin blockchain, to catch bad actors. Thus, if there is a nefarious agenda at the heart of this escapade, the same tactics employed in those instances, may provide the damaged parties with the reparations they seek. Luckily, there is hope moving forward, as this is exactly the type of scenario that we designed the Token IQ issuance platform in favor of protecting against, and I think this case will certainly prove how necessary of a feature ‘Token Recovery’ truly is.