Sunday, February 3rd 2019
Crypto Exchange Head Takes $137 million Cold Wallet Key to his Grave
In a classic case of why businesses should have disaster mitigation plans in place, Vancouver-based crypto-currency exchange QuadrigaCX has potentially lost USD $137 million in assets (customers' money), after its founder's death. Founder and director Gerry Cotten had stored the money in an offline cold wallet on an encrypted laptop and committed its password to memory. In December, Cotten died overseas of Crohn's disease, leaving the company with no other handwritten record of the laptop's password.
Crypto exchanges tend to store assets in cold wallets either on offline computers or plain paper, to avoid the wallets getting stolen on hacked online computers. The company has hired cybersecurity firms to try and decrypt the laptop to no success thus far. Cotten's widow Jennifer Robertson in a sworn affidavit to a court said that she had not found any traces of the password in their residence despite repeated and thorough searches. QuadrigaCX in addition to the $137 million under management, also holds $53 million in disputed assets.
Source:
ArsTechnica
Crypto exchanges tend to store assets in cold wallets either on offline computers or plain paper, to avoid the wallets getting stolen on hacked online computers. The company has hired cybersecurity firms to try and decrypt the laptop to no success thus far. Cotten's widow Jennifer Robertson in a sworn affidavit to a court said that she had not found any traces of the password in their residence despite repeated and thorough searches. QuadrigaCX in addition to the $137 million under management, also holds $53 million in disputed assets.
52 Comments on Crypto Exchange Head Takes $137 million Cold Wallet Key to his Grave
And so there are much more loose work arounds:
www.theblockcrypto.com/2019/02/08/quadrigacx-likely-lacked-any-eth-cold-wallets-per-report/
Which some negative people interpret as theft, fraud, embezzlement. hehehe
Did he die, or didn't he? More importantly is Quadrigacx insured?
If I remember right, a registered investment business needs to be insured in Canada, so initial investor capital is at least (partially) protected and Quadrigacx was big enough to have to declare it. The real questions become; was the firm properly audited, how much money was really lost on their 1st ETH hack, why wasn't it forcibly shut down, and how much money is really locked up in this 2nd fiasco.
They'll be plenty of blame go around with over 190 million CAD dollars to account for.
I believe we are in a downturn of society where people shut themselves out of "progress" because it disturbs their peaceful existence.
Too many people refuse to learn just the most simple things. The middle aged group cosy with Instagram and with facebook (Used in their Business)
refusing to broaden their business profile with tags. And it doesn't matter if you show them how effective Tags are for single posts.
My bro in law deals with shares, long turn investment but calls Crypto a Scam.
Pretty sure many Crypto warriors here have a few stories to tell.
Is JP Morgan's new altcoin a scam? Given their bad fraudulant history, what if Wells Fargo decides to issue their own altcoin, would that be a scam? These are all recognized legal institutions ;)
Meanwhile 10 years later Bitcoin continues on with no controlling owner and value is completely determined by the market with no interventions.
If bitcoin was owned by a corporation it would most probably be sued into oblivion by every fiat issuing institution around the globe.
And for swapping Currency around FIAT is totally capable. In the end its always FIAT.
Many countries are rushing to impose regulation, or stating they won't have any to attract that industry. In the U.S. states like Wyoming are leading their country in terms of regulation.
Ok, so if someone has their private keys offline, how can somebody else hijack them?
This is not a public coin, like bitcoin. You won't be able to buy it and sell someone. We won't be mining it. I doubt it will actually be visible to clients in any way.
It's just an IT solution that JPM will use internally. They're simply implementing a distributed ledger. 1 "JPM coin" will be worth 1 USD.
Why are they doing it? That's pretty simple.
When you transfer money to another person/account in the same bank, it can happen instantly. It's an internal operation.
When you transfer money to another bank, it has to go through an inter bank transfer system. That's why these transfers take at least few hours in the same country and usually at least a day between countries.
Remember JPM is a global bank. However, their offices in different countries are technically separate banks with separate books (even if they're all on the same server).
So every transfer has to go via the inter bank systems.
What will change, is that JPM will be able to secure the transaction based on distributed ledger and transfer money in seconds. The formal confirmation will still take 1-2 days (it'll have to go via the inter bank systems), but clients won't have to wait.
Also, this means that I, as JPM client in Poland (and I'm thinking about it), can open an investment account in JPM USA, that I'll use for investing on NASDAQ. So I'll be able to transfer money instantly and make instant operations (which makes intra day trading possible).
How this work today is: I can either have everything in US (which means I have to keep my money there, in USD) or I can invest in NASDAQ from my broker in Poland, but I pay high fees and every operation takes 1-2 days.
But you have a point as a third party usually cost more money. JP Morgan thinks alike the lines of the Crypro crowd ;)
Not bad for a bank which gave partially reason to the creation of Bitcoin.