Comment
Comment
re: #294 goddamnedfrank
I had heard about the QuadrigaCX shutdown, but only today got to see the details.
So, the CEO of the company had sole control of the exchange funds. According to the Coindesk article, he would move funds from the exchange’s hot wallets (the ones that face the users of the exchange) to the cold wallets (the ones that are not connected to the Internet). Wisely, he encrypted the cold wallets to prevent hacking attacks. Unwisely, he’s the only one who apparently had the decryption code.
Why anyone thought this was a good idea defies description. You never ever have one person in sole control of a company’s funds.
As of Jan. 31, 2019, there were roughly 115,000 users with balances signed up on the exchange, with $70 million CAD in fiat and $180 million CAD in crypto owed overall, according to the filing.
The exchange holds roughly 26,500 bitcoin ($92.3 million USD), 11,000 bitcoin cash ($1.3 million), 11,000 bitcoin cash SV ($707,000), 35,000 bitcoin gold ($352,000), nearly 200,000 litecoin ($6.5 million) and about 430,000 ether ($46 million), totaling $147 million, according to the affidavit.
It was not clear what portion of the exchange’s crypto holding were kept in cold storage, versus its hot wallet. In the affidavit, Robertson explained that “only a minimal amount of coins” were stored in the hot wallet, but specifics were not provided.
Jennifer Robertson is the widow of the now-deceased CEO, Gerald Cotten, according to court documents.
More from CoinTelegraph:
Per The Globe and Mail, Cotten mostly worked form his computer at home, which is encrypted. Cotten’s wife, Jennifer Robertson, reportedly stated in an affidavit, “I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.” Robertson purportedly went so far as to hire a cybersecurity expert to “hack into Gerry’s computers” to no avail.
Other exchange operators told The Globe and Mail that it was unusual for a single executive to control access to an exchange’s funds, as it would have made Cotten a target for kidnapping and extortion. Michael Gokturk, CEO Einstein Exchange in Vancouver, said, “It’s the equivalent of walking around with millions of dollars in cash on you at all times.”
Users of the platform, some of whom were already unable to withdraw funds due to a legal battle between the exchange and a major Canadian bank, took to Twitter and Reddit following an announcement of Cotten’s passing. Some users asked for proof of death or an obituary.
Robertson’s affidavit reportedly states, “There have also been threats made against [her]. “Slanderous comments have been made against [her] and sent through Facebook messenger to [her] entire contact list.” Robertson is reportedly funding the creditor protection motion herself and a preliminary hearing has been set for Feb. 5.
IOW, the exchange was being run by a rank amateur who had no business being in charge of millions of dollars of other people’s money.
Also, this failure is another example of why no one should ever store large sums of money on a cryptocurrency exchange.
