One of Canada’s largest cryptocurrency exchanges is in Nova Scotia Supreme Court today seeking creditor protection, following the reported sudden death of its 30-year-old founder, Gerald Cotten.
Lawyer Maurice Chiasson, who is representing Vancouver-based QuadrigaCX, requested a 30-day stay of proceedings before Judge Michael Wood in a bid to stop any lawsuits from proceeding against the company at this point.
The company wants time to search for roughly $250 million Cdn in assets left inaccessible after Cotten’s death. His widow said he died suddenly in India due to complications from Crohn’s disease on Dec. 9 while opening an orphanage. The couple owned a home outside Halifax.
The death of the company’s CEO and sole director has left roughly 115,000 users without their funds. Lawyers for some of the affected users were in the Halifax court today.
Court filings show that some have very large balances, with the largest affected user claim reportedly valued at approximately $70 million. QuadrigaCX employees say the only way to access much of the cash was lost when Cotten died.
Cotten was apparently the only person with the recovery code to access the currency held in secure “cold wallets” — where the company kept much of its customers’ money.
“With a cold storage wallet, it’s completely offline. It’s not connected to the servers or the infrastructure set up by the exchange. It’s usually a physical device that you would plug into a computer and requires a button to be pressed and it might need a password,” Quadriga customer Elvis Cavalic told CBC’s As It Happens.
It appears the way to access the cold wallets was not left behind with Cotten’s wife, the executor of his estate, Cavalic said.
Cotten’s encrypted laptop will be given to lawyers acting for the creditors and will be eventually given to a court-appointed monitor.