The $145 million in digital assets that are reportedly stuck in encrypted cold wallet storage of QuadrigaCX crypto exchange could actually be missing, according to analysts cited by the Wall Street Journal (WSJ) on Feb. 6.
In December 2018, the founder of major Canadian cryptocurrency exchange QuadrigaCX, Gerald Cotten, passed suddenly. Cotten was reportedly the sole executive with access to the exchange’s cold wallets. As such, customers have been unable to withdraw funds owed to them, and the exchange has sought creditor protection in Canadian court.
A filing from Ernst & Young states, “Quadriga was unable to access the cold wallets and/or discovered that the cold wallets contained minimal cryptocurrency units.” ‘Big Four’ auditing firm Ernst & Young was appointed an independent third party to monitor the creditor protection proceedings.
Users of the platform have grown suspicious of the circumstances surrounding Cotten’s death, with some asking for an obituary or proof of death. Yesterday Bloomberg reported that Cotten filed a will 12 days before his death. Cotten reportedly signed his last will and testament in November 2018, designating his wife as the only beneficiary and the executor of his estate.
James Edwards, a a cryptocurrency analyst who publishes research on a Zerononcense, reportedly reviewed the publically available transactions of the exchange, and found no evidence that the exchange controlled any of the wallets it claimed to. “It appears that there are no identifiable cold wallet reserves for QuadrigaCX,” he purportedly wrote in a report.
According to Edwards, there is evidence to suggest that wallets with larger balances once existed, but those balances are very low. Currently, the largest wallet is apparently a hot wallet, which is used for transactional purposes.
Other experts and execs in the crypto sphere have express their skepticism regarding the exchange’s financial woes. Elementus Group CEO Max Galka said it was “extremely likely that there aren’t any cold wallets.”