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

Cathedral to hold inclusive memorial for those lost through overdoses

Christ Church Cathedral memorial to respect diverse spirituality of participants

Another busy day for BC Ferry passengers

First sailings to and from Swartz Bay full or nearly full

Free cancer care workshops at SHOAL centre this May

Cancer charity InspireHealth offer patient-centred worhshops

Second cannabis dispensary earns Langford approval

The Original Farm Langford Ltd. plans to open in Belmont Market

Art Gallery of Greater Victoria receives $2.8M Anthony Thorn donation

Victoria News article inspires hefty donation for gallery expansion

POLL: How often does your family use BC Ferries?

Navigating the lineups for BC Ferries is a way of life for… Continue reading

Crime Stoppers most wanted for Greater Victoria for the week of April 16

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

Contaminated soil to stay at contentious Shawnigan Lake site?

Reaction: “The community would lose their minds if this plan proceeds.”

4 victims killed in Penticton shooting spree remembered at vigil

John Brittain, 68, is charged with three counts of first-degree murder and one count of second-degree murder

B.C. awaits Kenney’s ‘turn off taps,’ threat; Quebec rejects Alberta pipelines

B.C. Premier John Horgan said he spoke with Kenney Wednesday and the tone was cordial

Snowbirds arrive on Vancouver Island for annual spring training

VIDEO: Acrobatic air team back in Comox for annual spring training

Vancouver Island restaurant among Canada’s most sustainable eateries

Locals in Courtenay only B.C. or small city establishment to make the top six list

Federal government extends deadline to make Trans Mountain decision to June 18

The National Energy Board endorsed an expansion of the Trans Mountain pipeline on Feb. 22

Most Read