Digital currencies news site CoinDesk has reported that a Canadian cryptocurrency platform called QuadrigaCX is unable to pay $190 million back to its customers. The reason: the only person who knew the passwords to the so-called “cold storage” of the exchange unexpectedly died. That person also happened to be the platform’s founder, Gerald Cotten.
Cotten’s widow, Jennifer Robertson, filed a sworn statement with the Nova Scotia Supreme Court on the last day of January saying that the exchange owes its customers roughly 250 million Canadian dollars (CAD) in both cryptocurrency and fiat.
According to the filing, the platform accounted for roughly 115,000 users. Their balances were comprised of $70 million CAD in fiat and $180 million CAD in crypto.
Wait, What’s Cold Storage?
Storing your coins in a cold storage simply means storing your coins offline using a private key. Cold storage is typically used when large sums of coins are involved and when coins can be stored for a long period of time. Coins are stored offline in order to ensure that they are safe from hacking – think Mt.Gox.
Going back to the QuadrigaCX case, it remains unclear what portion of the cryptocurrencies were held in cold storage, versus its ‘hot’ wallet. In her statement, Robertson did indicate that“only a minimal amount of coins” were stored in the hot wallet, but did not provide any detailed numbers.
Robertson’s statement also tries to preempt any lawsuit against it by requesting that the court enter a stay of proceedings.
This, she argued, would “allow Quadriga and its contractors additional time to find whatever stores of cryptocurrency may be available and also to negotiate the bank drafts available to Quadriga.”
Robertson also argued that lawsuits would diminish the potential sale value of the platform, indicating that the company is considering selling it off to pay back its customers. Without a stay then, customers could end up paying the price.