WSJ: QuadrigaCX Funds Might Be Missing And Not Stuck, Expert Claims

Article by · February 8, 2019 ·

The allegedly stuck $145 million digital assets in QuadrigaCX crypto exchange’s encrypted cold wallet could possibly be missing, an analyst cited by the Wall Street Journal (WSJ) on Feb. 6 was reported as saying.

Gerald Cotten, the founder of major Canadian cryptocurrency exchange QuadrigaCX died suddenly in December 2018. The report stated that Cotten was the sole executive who has access to the cold wallets of the exchange. Since then, customers have not been able to cash out their funds from the platform, and creditor protection was sought by the exchange in a Canadian court.

According to a report by Ernst & Young, “Quadriga was unable to access the cold wallets and/or discovered that the cold wallets contained minimal cryptocurrency units.” ‘Big Four’ auditing firm Ernst & Young was assigned as an independent third party to control the proceedings of the creditor protection.

There was suspicion surrounding the circumstances of Cotten’s death as some of the users of the platform requested an obituary or proof of death. Cotten was reported to have filed a will 12 days prior to his death, Bloomberg reported. According to the report, Cotten’s last will and testament was signed in November 2018, where he assigned his wife as the only beneficiary and the executor of his estate.

According to a report, the publically available transactions of the exchange was studied by a cryptocurrency analyst who publishes research on a Zerononcense, James Edwards and he didn’t discover any proof that the exchange managed any of the wallets it claimed to. “It appears that there are no identifiable cold wallet reserves for QuadrigaCX,” he noted down in a report.

Edwards reported that evidence which suggest wallets with larger balances existed before, however, those balances are very low. Presently, the largest wallet is a hot wallet, that is used for the purposes of the transaction.

Experts and execs in the crypto world have expressed their doubt regarding the financial crisis of the exchange. Max Galka, Elementus Group CEO noted that it was “extremely likely that there aren’t any cold wallets.”

A tweet by Jesse Powell, the CEO of crypto exchange Kraken on Feb. 2 reads that the story was “bizarre and, frankly, unbelievable. Powell even suggested that the Royal Canadian Mounted Police contact his exchange as it has “thousands of wallet addresses known to belong to[QuadrigaCX]” that is being investigated by Kraken.

The British Columbia Securities Commission (BCSC) informed Reuters earlier today that QuadrigaCX is not under the regulatory purview of the commission. The exchange was not regulated considering that there was no report showing that it transacted securities or ran as an exchange.

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