Missing coins mystery
Financial investigators have discovered that the digital wallets of the QuadrigaCX exchange had been emptied of millions in cryptocurrency months before founder Gerald Cotten died.
Mr Cotten died unexpectedly in India in December but unfortunately had not shared any passwords with anyone. Investigators appointed to wind up his firm after his death expected to find digital wallets on his laptop containing c$180 million but once they gained access, they found that the wallets had in fact been emptied months before Mr Cotton’s death.
Most of the cryptocurrency that QuadrigaCX’s 115,000 customers deposited with the exchange was meant to be kept in ‘cold storage’, meaning an offline environment designed to protect stored cryptocurrencies from internet hackers. The investigators said they did not know what happened to the digital cash they had expected to find.
However, they found evidence that Mr Cotten had 14 other user accounts "created outside the normal process" that may have been used to trade on the QuadrigaCX exchange. The forensic investigators are now looking into the trading that was carried out through these other accounts to find out if it can trace the crypto-cash that passed through them.
A reward of $100,000 has now been offered for information about where the cash might have gone but, as one commentator remarked, the unregulated nature of cryptocurrency exchanges, plus the fact that so many use them to hold their coins rather than just exchange them, “invites fraud” and added that if anyone is thinking of using an exchange to hold their coins, they should do as much in-depth due diligence as they possibly can.
Roger Isaacs, Forensic Partner at Milsted Langdon, said: “More and more people are investing in cryptocurrency which is no longer the sole preserve of geeks and criminals but this case highlights the pitfalls that await even more experienced cyber-coin traders.”
Author: Roger Isaacs 8 March 2019