The death of Gerald Cotten, CEO of the cryptocurrency exchange Quadriga CX, has left a critical issue unresolved: how will the company’s customers recover the C$190 million ($145 million) in funds? Unfortunately, only Cotten, who passed away, had the password to the digital “wallets” that stored the funds. These wallets are used to store the keys required to send and receive cryptocurrency.

Cryptocurrency trading has become a popular way for people to diversify their investments, but the sudden death of Cotten highlights the risks involved. He died on December 9, 2018, in India due to complications from Crohn’s disease, without sharing the necessary passwords. This has left around C$190 million ($145 million) in Bitcoin, Litecoin, Ether, and other cryptocurrencies inaccessible, as outlined in court documents filed in Halifax, Nova Scotia, on January 31.

Why is retrieval so difficult?
According to Cotten’s widow, Jennifer Robertson, the 30-year-old was extremely security-conscious, encrypting his laptop, email, and messaging system. He had transferred the majority of the digital assets into cold storage to prevent hacking, taking sole responsibility for managing the funds and business accounts.

A Bloomberg report noted that cryptocurrency exchanges faced at least five major attacks last year. Japan, a hub for digital-asset exchanges, experienced two of the largest known crypto hacks: the Mt. Gox collapse in 2014 and the theft of nearly $500 million from Coincheck in January 2018. Cotten’s high-level security precautions were, therefore, understandable.

Efforts to recover the funds
Experts have attempted to hack Cotten’s computers, mobile devices, and an encrypted USB key, but so far, they have been unsuccessful. Robertson informed the court that she could not locate his passwords or any business records.

“After Gerry’s death, Quadriga’s cryptocurrency inventory became inaccessible, and some of it may be lost,” Robertson stated, noting that the company’s access to funds has been severely restricted.

Quadriga CX’s response
Quadriga CX’s directors have sought creditor protection from the Nova Scotia court as they work to resolve “significant financial issues” that have hampered their ability to serve customers. This was announced in a notice on their website on January 31. A hearing is scheduled, with Ernst & Young proposed as a monitor.

“For the past weeks, we have been trying to resolve our liquidity problems, including locating and securing the cryptocurrency reserves stored in cold wallets, which are necessary to satisfy customer balances. We have also tried to find a financial institution to handle bank drafts, but unfortunately, we have been unsuccessful.”

Class-action lawsuits and skepticism
On Reddit forums, there have been calls for customers to file a class-action lawsuit against Quadriga CX. Some believe the cryptocurrency business is fraudulent, despite information about how it works being easily accessible. Additionally, there is growing speculation about whether Cotten is actually dead, with some suggesting that Quadriga CX funds have been moving despite the company’s claim of no access.