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

New report on 2017 wildfires calls for better coordination with First Nations

Tsilhqot’in National Government documents 2017 disaster and lists 33 calls to action

Proposed Boston Flats Eco-Depot hits rezoning amendment hurdle

TNRD now considering way forward after third reading of bylaw defeated

Cache Creek council votes to rejoin local transit system

Details need to be worked out, but hopes are that change can be expedited

Ashcroft residents get information at Community Forum

Water treatment plant, recycling, an Eco-Depot, the budget, and more among items addressed

Elizabeth May’s wedding will be a ‘low-carbon affair’ in Victoria on Earth Day

Green party leader’s wedding party to depart in a cavalcade of electric cars

VIDEO: Driver in bizarre hit-and-run at B.C. car dealership turns herself in

Police believe alcohol was a factor in incident causing estimated $15,000 in damages

‘B.C. cannot wait for action’: Top doctor urges province to decriminalize illicit drugs

Dr. Bonnie Henry says current approach in ‘war on drugs’ has criminalized and stigmatized drug users

B.C. woman, 76, challenges alcohol-screening laws after failing to give breath sample

Norma McLeod was unable to provide a sample because of her medical conditions

B.C. youth coach banned amid sexual harassment, bullying scandal: Water Polo Canada

Justin Mitchell can’t take part in Water Polo Canada events or clubs

Wilson-Raybould: Feds want to just ‘manage the problem’ of Indigenous Peoples

Former federal justice minister speaks at First Nations Justice Council meeting in B.C.

Haida youth travels to New York for UN forum on Indigenous issues

Haana Edensaw presented her speech in Xaad Kil, Masset dialect of the Haida language

Female real estate agents warned of suspicious man in Metro Vancouver

The man requests to see homes alone with the female agent, police say

Can you put your phone down for Mother’s Day?

#DiningMode campaign encourages people to leave the phone alone while eating

Horgan heckled as gas prices sit at record high, could go up more

Premier John Horgan blames refiners, not taxes

Most Read