Investigators Find QuadrigaCX Crypto Wallets Were Emptied Before CEO’s Death

The case of Canadian cryptocurrency exchange QuadrigaCX just got a lot more complicated. After CEO Gerald Cotten’s death late last year, the company said it was unable to access the wallets holding customer funds because Cotten was the only person with the passwords. After examining data provided by the exchange, auditor Ernst & Young reports that the exchange’s wallets were emptied months before the founder’s death.

Like most cryptocurrency exchanges, QuadrigaCX kept most of its funds in so-called “cold wallets.” These repositories of cryptocurrency aren’t connected to the internet, making them more secure from hacking attempts. The company would just move small amounts of crypto into the “hot wallets” as needed. However, it’s extremely unusual for a single person to have access to the cold wallets.

Ernst & Young says in a report to Canadian courts that it has gained access to Cotten’s laptop and identified all the known cold wallets. According to QuadrigaCX, those wallets should have had between $140 million and $190 million in cryptocurrencies like Bitcoin and Etherium. In reality, they’re empty.

It appears Cotten began transferring funds out of the cold wallets in the year prior to his death. In April 2018, most of the wallets were cleaned out. One remained active, presumably to service the needs of customers in the short term. However, that wallet was emptied on December 3, 2018. That’s just a few days before Cotten passed away in an Indian hospital. To say that’s suspicious would be a profound understatement.

Gerald Cotten reportedly died in India due to complications from Crohn’s Disease, but many QuadrigaCX users have expressed skepticism. The cite statements about the nature of the exchange’s security measures that don’t match what we currently know, as well as allegedly shady characters involved in the business side of QuadrigaCX. These people believe Cotten is alive and well, living large on their stolen money. The new revelations in the case will only strengthen that belief.

There’s virtually no regulation of cryptocurrency exchanges, and nothing in the way of insurance against losses. Ernst & Young is trying to track the funds moved out of the cold storage wallets, but one Bitcoin looks like all the rest after it makes hops in the blockchain. One former QuadrigaCX customer has offered a $100,000 reward for information about the lost cryptocurrency, but whoever knows that probably already has between $140 million and $190 million.