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

Man cycles across B.C. Interior for sobriety

Vancouver Island Resident Matt Fee is approaching the final phase of his cross-Canada bike journey to raise awareness about addiction recovery.

LETTER: Upper Arrow Heights resident urges council to deny rezoning in area

Mayor and Council, I am concerned about the application for rezoning and… Continue reading

Conservative leader stops in Lake Country

Andrew Scheer says he would bring back two child-focused tax credits cut by the Liberals

Kelowna classroom where child allegedly overdosed re-opens after cleaning

An 8-year-old was unresponsive and unable to walk after ingesting an unknown substance at school.

Revelstoke’s Dam Survivors bring home bronze

The dragon boat team finished up their season with a medal

VIDEO: Liberals make child care pledge, Greens unveil platform on Day 6 of campaign

Green party leader Elizabeth May unveils her party’s platform in Toronto

B.C. ends ‘birth alerts’ in child welfare cases

‘Social service workers will no longer share information about expectant parents without consent’

U.S. student, killed in Bamfield bus crash, remembered as ‘kind, intelligent, talented’

John Geerdes, 18, was one of two UVic students killed in the crash on Friday night

Facebook group forms committee against Thompson Nicola R.V. crackdown

Group discusses issues with regional R.V. bylaw at recent meeting

Free Tesla 3 offered with purchase of Surrey townhome

Century Group’s offer for Viridian development runs through Oct. 31

B.C. communities urged to improve access for disabled people

One in four B.C. residents has disability, most want to work

Sikh millworker lodges human rights complaint against Interfor, again

Mander Sohal, fired from Delta’s Acorn Mill, alleges discrimination based on religion and disability

Twenty day search for missing Labradoodle ends with tears of joy

After twenty days of worry, thousands of kilometers driven, hundreds of social… Continue reading

Okanagan inmate who allegedly assaulted prisoners and officer gets trial extension

Afshin Maleki Ighani appeared in Penticton Supreme Court on Monday

Most Read