Cryptocurrency Exchange QuadrigaCX Loses US$145 Million With Death Of CEO

Daniel Fowler
February 5, 2019

Gerald Cotten, founder of QuadrigaCX, died from "complications with Crohn's disease" in India.

In an affidavit, the widow of Gerald Cotten, Quadriga's founder, CEO and sole director, said he died suddenly on December 9 due to complications from Crohn's disease.

Quadriga has 363,000 registered users and owes a total of C$250 million to 115,000 affected users, according to an affidavit filed by Cotten's widow Jennifer Robertson on behalf of the company. No conclusive figures could be pinned, but the researcher also divulged that Quadriga enlisted the use of fractional reserves to service its customers, using client deposits to issue withdrawals.

Evidently Cotten was the sole person responsible for transferring QuadrigaCX funds between the company's "cold wallet" - secure, offline storage - and its "hot wallet" or online server, according to court documents. Robertson has asked the court for a stay of proceedings to protect the company from lawsuits and buy time while QuadrigaCX tries to access the cryptocurrency tied up in its cold wallets.

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Citing a sworn affidavit by Robertson as she filed for credit protection, Sky News reports that Cotten held "sole responsibility for handling the funds and coins".

"Despite repeated and diligent searches, I have not been able to find them written down anywhere", she said.

A statement from QuadrigaCX's board of directors said: 'For the past weeks, we have worked extensively to address our liquidity issues. In the filing she noted that there had been a "significant amount of commentary on Reddit and other web based platforms about Quadriga, Gerry's death (including whether he is really dead) and missing coins". Other companies have already come forward to express interest, she said, warning that the platform's value would nearly certainly be undercut if the company faced a legal threat from its users.

Vancouver-based Quadriga says it filed an application for creditor protection on January 31 and the Nova Scotia Supreme Court will be asked on February 5 to appoint a monitor to oversee the proceedings. Robertson said the many types of deposits made it hard for the company to stop the inflow of money - even as it lost its ability to access or disburse funds.

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