Nearly $478,000 in B.C. exchange’s crypto-coins gone, court hears

A report from Ernst & Young says QuadrigaCX is unable to access funds in insolvency case

The court-appointed monitor overseeing the search for the $260 million owed to clients of the faltering QuadrigaCX cryptocurrency exchange says it recently found more than $900,000 in digital assets — only to see more than half of those crypto-coins escape its grasp.

The bizarre turn of events was revealed Tuesday in the first court report submitted by Ernst and Young, which was appointed monitor Feb. 5 when the Nova Scotia Supreme Court granted the insolvent company protection from its creditors.

READ MORE: B.C. cryptocurrency exchange gets court orders amid hunt for $180M in assets

The report says the monitor learned last week that QuadrigaCX was holding $902,743 in Bitcoin, Litecoin and Ether cryptocurrencies in so-called hot wallets — but something went wrong on Feb. 6.

Ernst and Young says QuadrigaCX “inadvertently” transferred 103 Bitcoins valued at $468,675 to so-called cold wallets, which the company is now unable to access.

“The monitor is working with management to retrieve this cryptocurrency from the various cold wallets, if possible,” the report says. ”The monitor has made arrangements to transfer the remaining cryptocurrency into a cold wallet which will be retained by the monitor.”

About 115,000 QuadrigaCX customers are owed about $70 million in cash and $190 million in Bitcoin and other cryptocurrencies.

The Vancouver-based exchange was shut down Jan. 28, more than a month after its CEO and sole director — Nova Scotia resident Gerald Cotten — died while travelling in India, leaving his company without access to much of its cryptocurrency.

His widow, Jennifer Robertson, has said in court documents that Cotten was the only person with access to his laptop, which is thought to contain the digital keys to the cold wallets.

Cold wallets are offline storage devices protected by encryption technology. Cryptocurrency exchanges typically use them to store the bulk of their digital assets, which puts them beyond the reach of online hackers.

Hot wallets are online sites that store smaller amounts of cryptocurrencies, making them readily available for trading — a practice akin to using a currency float in a cash register.

The latest twist in the QuadrigaCX case is sure to feed rampant online speculation about the company’s dealings. Court documents have pointed to persistent rumours about Cotten’s death and threats aimed at his widow, who lived with Cotten just outside of Halifax.

Aside from the cold wallet snafu, Ernst and Young also reported that there is more than one laptop at the centre of the case.

Electronic devices recently retrieved from an encryption expert working for QuadrigaCX include: two active laptops; two older model laptops; two active cellphones; two dead cellphones; and three encrypted USB flash drives.

As well, steps have been taken to retrieve Cotten’s desktop computer from his home office in Fall River, N.S.

Michael MacDonald, The Canadian Press

Like us on Facebook and follow us on Twitter

Just Posted

B.C. Interior free from measles

Vancouver measles outbreak hasn’t spread to the B.C. Interior

Input sought from Cache Creek businesses on Downtown Vision plan

Attracting and retaining employees and businesses are priorities

Community Futures gets more funding to continue business support program

Programs such as Business Ambassadors help small businesses, not-for-profits, and First Nations

Make Children First’s CareFairs are going out with a bang

Folllowing changes to funding, upcoming CareFairs in the region will be the last ones ever held

Support available for those looking after loved ones with dementia

Despite the growing number of people with dementia, a stigma still surrounds it

Students give two thumbs up to no more B.C. student loan interest

Eliminating the loan interest charges could save the average graduate $2,300 over 10 years

Ontario man accused of killing 11-year-old daughter dies in hospital, police say

Roopesh Rajkumar had been hospitalized with what police described as a self-inflicted gunshot wound

Manitoba ‘pauses’ link with ex-B.C. premier Gordon Campbell after allegations

Campbell had been hired to review two major hydro projects

Heritage minute features Japanese-Canadian baseball team, internment

The Vancouver Asahi baseball team won various championships across the Pacific Northwest

UPDATE: Woman, off-duty cop in critical condition after stabbing outside B.C. elementary school

The officer was interceding in an alleged assault when he and the woman were stabbed

Vehicle fire on Coquihalla near Kamloops

A large plume of smoke could be seen rising into the sky over Highway 5

$10-a-day child care not in 2019 budget, but advocate not irked

Sharon Gregson with the Coalition of Child Care Advocates of B.C. says NDP on track to deliver promise

B.C. Seniors Advocate questions labour shortage in care homes

Are there really no workers, or are care aide wages too low?

B.C. business groups worry about looming economic decline in wake of NDP budget

The party’s second government budget focused on plenty of spending, business advocates say

Most Read