QuadrigaCX unprecedented scandal

[KYCbench]

 

2019 started with another high-profile scandal: Canadian cryptocurrency exchange QuadrigaCX cannot return approximately $ 190 million to its customers and the reason is sudden death of its owner, Gerald Kotten.

QuadrigaCX lost access to customer assets, as only Gerald Kotten, had access to wallets.

Most of the funds of the exchange are stored in "cold" wallets (without connecting to the network). This is an effective way to protect customer funds. It turned out that Cotten himself managed the “cold” wallets and after his death no one could get access to the funds that are stored on them.

In the Supreme Court, Kotten's widow, Jennifer Robertson, stated that QuadrigaCX owes its clients about $ 190 million in the form of cryptocurrency and fiat money. Cotten's laptop is with Robertson, as she is his only executor and beneficiary, but it does not help much. She does not know the password, and the specialist hired by the company could not bypass encryption. Robertson claims that Cotten did not leave any business records. Also, the widow of the entrepreneur reported that the "hot" wallets (which are connected to the network) kept the "minimum number of coins"…

Some believe that Cotten faked his death and left clear instructions to his wife. According to another version, the leaders of the company who took advantage of the situation are to blame. Robertson has already posted death certificate of her husband and his death was confirmed by the government.

If the company really does not have access to “cold” wallets, it will not be possible to return the funds. Cryptocurrency will remain there forever. At the same time, QuadrigaCX filed for creditor protection with the Supreme Court of Nova Scotia. But hopes of the company that the authorities will assist them and recognize their financial difficulties are gone. Accordingly to latest news victims won’t get any help from Canadian Regulator.

The moral of the story can be only one: appliance of the proper practices and standards in any company daily operations are vital and essential along security in any business. Achieving ISO27001 accreditation demonstrates commitment of KYCBench to maintaining the highest standards of data security and provides an independent, expert assessment that information security is managed in line with international best practice and KYCBench business objectives.





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