The controversy-riddled Canadian exchange QuadrigaCX and their pursuit of the cold-wallets that holds CAD $190 million [USD $143 million] has seen yet another development, this one arising from a five-year-old podcast.
Gerry Cotten, the founder of QuadrigaCX passed away due to Crohn’s in December 2018, whilst on his trip to India with many questions unanswered. One of them was where the exchange stored its cold wallets, which contains a large proportion of the held assets. Cotten was the sole person responsible for the wallets and its keys.
Ernst & Young Inc, the global audit firm that was tasked with being the independent director to the investigation into QuadrigaCX describes Cotten’s role as:
“Primarily responsible for managing Quadriga and held a significant amount of institutional knowledge regarding the QCX Platform and Quadriga’s business.”
While on the “True Bromance Podcast,” with Sage Brocklebank, Michael Karl Richards, and Brett Michael, in February of 2014, Cotton spoke about the atmosphere in Canada and the United States, the initiation of QuadrigaCX and more relevant to the current situation, the state of the private keys.
Ironically, the QuadrigaCX founder warned that losing the passwords to the was equivalent to, “burning cash in a way.” With reference to the private keys of the wallets, which the exchange’s creditors and 100,000 are desperately seeking, Cotten stated in 2014:
“Even the U.S. government, with the biggest computers in the world, could not retrieve those coins if you’ve lost the private key. It’s impossible to retrieve those.”
Cotton further spoke about how the private keys can be used to ensure that the users’ held is never stolen:
“The paper is a great way to your Bitcoins. Basically, all you need to send Bitcoins is your private key, which is a string of a ton of numbers and letters. So, you don’t really need that keep that on your computer to use , if you’re not actually spending it.”
“So, the best way to do it is take your private key, print it off, it offline in your safety deposit box, vault, whatever, and then take the public key, which is your address, and use that to send money to it. So that way you can never have your stolen, unless someone, like, breaks into the bank, steals your safety deposit box and gets into your private key and so forth.”
He further shed light on how the exchange worked with banks to ensure that the security of the coin is not compromised:
“So, we just send money to them, we don’t need to go back to the bank every time we want to put money into it. We just send money from our app directly to those paper wallets, and keep it safe that way.”
Cotton compares the above process to putting a “bunch of paper wallets,” into a deposit box and remembering the number of them. The goal of the same is:
“So, we just send money to them, we don’t need to go back to the bank every time we want to put money into it. We just send money from our app directly to those paper wallets, and keep it safe that way.”
He also ensured need not fear of a hacker stealing their funds, as the latter will only receive information that is “offline.” Cotton added that the hackers can see where the coins went, through the address, but accessing the same will be impossible.
QuadrigaCX has been going through multiple scuffles with the banking authorities as well. Earlier in October, QuadrigaCX had accused the Canadian Imperial Bank of Commerce [CIBC] of withholding and preventing ease of access to the exchange’s funds worth $21.6 million. CIBC froze five accounts under the name Costodian Inc, the exchange’s payment partner. The bank cited discrepancies regarding the identity of the users as the main reason for the freeze.
In November, the exchange had $26 million of its funds seized by the Ontario Superior Court of Justice on an “interpleader order” with the funds put on hold until the rightful owner of the same is determined.
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Published at Sun, 17 Feb 2019 08:44:18 +0000