More than 100,000 businessmen are now locked out of their Ksh14 billion investment in cryptocurrency after a Canadian entrepreneur died last year taking his encrypted access to their money with him to the grave.
Quadriga CX, Canada’s biggest cryptocurrency exchange, on Tuesday said that is unable to get a strangehold of the Ksh14 billion after Gerald Cotten, 30, the company’s CEO died enroute to India.
Many of the digital currencies held by Quadriga are stored offline in accounts known as ‘cold wallets’ meant to protect them from hackers. Cotten is the only person who had access to the wallets. The company’s management has been thrust into a financial mess wondering how it will refund the 100,000 users.
In a statement posted on its website on Tuesday, the company said it was granted creditor protection in the Nova Scotia Supreme Court as it tries to figure out how to climb out of the financial mess.
“For the past weeks, we have worked extensively to address our liquidity issues which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets. Unfortunately, these efforts have not been successful,” read the statement.
Quadriga’s quagmire is likely to raise debate on investor safety in an industry that is not properly regulated.
Cotten’s widow, Jennifer Robertson in an affidavit said that the laptop that Cotten used to run the currency exchange is encrypted.
“I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.” said Ms Robertson.
The company has hired tech experts to see if any information could be retrieved but ongoing efforts have had only ‘limited success’ in recovering a few coins and some information from Cotten’s computer and phone.
Documents filed at the court indicate that Quadriga is also investigating whether some of the cryptocurrency could be secured on other exchanges.