In a bizarre turn of events the CEO of a cryptocurrency firm, Gerald Cotten, came to India to open an orphanage but passed away suddenly in December last year and literally took the key that unlocks $137 million to his grave.
The firm Quadriga CX had announced mid-January that Cotten died of complications from Crohn’s disease on December 9, 2018, while volunteering at an orphanage in India. He was 30.
Cotten’s widow Jennifer Robertson revealed Cotten’s death on January 14 in a post on Quadriga’s Facebook page. “Gerry died due to complications with Crohn’s disease on December 9, 2018 while travelling in India, where he was opening an orphanage to provide a home and safe refuge for children in need,” she wrote.
Her affidavit says Quadriga’s automated systems continued to accept deposits until January 26, more than a month after Cotten’s death.
What is the key?
It is a string of passwords which open the wallets where cryptocurrencies are stored. Robertson said Cotten was the only person with the cryptographic keys to access $137 million of cryptocurrencies kept in ‘cold’ storage to mitigate the risk of hacks. The remainder is similarly frozen, in cash, by ongoing disputes with a bank and payment processors.
The six-year-old company is now seeking protection from its creditors as it attempts to access the lost funds.
Conspiracy theories abound
Quadriga’s strange tale is just the latest mishap to hit cryptocurrencies. Exchanges, in particular, have been the targets of hackers, racking up billions in losses. To reduce exposure, many custodians of cryptocurrency divide the funds between so-called ‘hot’ wallets, used for day-to-day transactions, and offline ‘cold’ storage, which is much harder for hackers to access.
Launched in 2013, Quadriga grew to be one of Canada’s largest exchanges. Michael Patryn, a cofounder of the company who left in 2016, said in a message to WIRED that control of the company’s cold storage crypto had always been centralized. That process didn’t initially spark alarm, Patryn said, because the company had insurance at the time, and its holdings were then relatively small. Large crypto custodians, like exchanges and foundations, typically require multiple people, each with his or her own key, to access funds. Those companies also have backups in case the keys (or the keyholders) are lost, though there are no regulations requiring it. In 2016, all of Quadriga’s directors, apart from Cotten, resigned, reports WIRED.
It’s possible, says Sirer, that the laptop and USB could eventually be cracked, or another copy of the keys will be found. In the meantime, customers wondering if they’ll get their money are floating theories of their own. Some commentators—including Sirer—questioned whether Cotten had actually died, reports WIRED.
It kind of sounds like the Quadrigga CEO might be faking his own death in India. https://t.co/8mg3OpdZCe
— Emin Gün Sirer (@el33th4xor) February 2, 2019