Business

Derek Tonin

QuadrigaCX fumbled away $500k after going offline

As if it couldn’t get any worse for QuadrigaCX, it now appears the exchange might have thrown away an additional $500,000 in cryptocurrency. According to a recently released report from the Supreme Court of Nova Scotia, written by audit company Ernst & Young (EY), the crypto exchange transferred 103 Bitcoin Core (BTC) to cold wallets they have no access to.

In the report, EY says this of the transaction, “On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 to Quadriga cold wallets which the Company is currently unable to access.”

The date of the transaction had to be infuriating to creditors waiting to get their money back. QuadrigaCX went offline as early as January 28, and went to court knowing full well that they were in financial jeopardy on February 1.

A big part of why they are in this trouble is due to the death of their former CEO, Gerald Cotten. Cotten had the sole access to the majority of the company’s crypto assets. When he died in India on December 9, 2018, he took that access with him to the grave. To think that anyone at QuadrigaCX might have transferred more BTC to those wallets when the company was already in so much trouble is mind blowing.

The report indicates that QuadrigaCX owes its creditors as much as $260 million. Previously, the exchange said that if it could access Cotten’s wallets, it could regain as much as $180 million.

What’s maybe most concerning to find in this EY report is how little the company has left. Before transferring the 106 BTC to cold storage, EY totaled their remaining crypto assets to be worth approximately $900,000. Now that 103 BTC have been lost, that total is $434,000.

Besides the financial troubles QuadrigaCX is fumbling through, they may also be in legal trouble. The Ontario Securities Commission has started a probe into the exchange, on the basis of the potential harm it may have caused to Ontario investors. It’s probably safe to say that if anyone from Ontario had money with QuadrigaCX, they were harmed.

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