Nearly $478,000 in B.C. exchange’s crypto-coins gone, court hears

A report from Ernst & Young says QuadrigaCX is unable to access funds in insolvency case

The court-appointed monitor overseeing the search for the $260 million owed to clients of the faltering QuadrigaCX cryptocurrency exchange says it recently found more than $900,000 in digital assets — only to see more than half of those crypto-coins escape its grasp.

The bizarre turn of events was revealed Tuesday in the first court report submitted by Ernst and Young, which was appointed monitor Feb. 5 when the Nova Scotia Supreme Court granted the insolvent company protection from its creditors.

READ MORE: B.C. cryptocurrency exchange gets court orders amid hunt for $180M in assets

The report says the monitor learned last week that QuadrigaCX was holding $902,743 in Bitcoin, Litecoin and Ether cryptocurrencies in so-called hot wallets — but something went wrong on Feb. 6.

Ernst and Young says QuadrigaCX “inadvertently” transferred 103 Bitcoins valued at $468,675 to so-called cold wallets, which the company is now unable to access.

“The monitor is working with management to retrieve this cryptocurrency from the various cold wallets, if possible,” the report says. ”The monitor has made arrangements to transfer the remaining cryptocurrency into a cold wallet which will be retained by the monitor.”

About 115,000 QuadrigaCX customers are owed about $70 million in cash and $190 million in Bitcoin and other cryptocurrencies.

The Vancouver-based exchange was shut down Jan. 28, more than a month after its CEO and sole director — Nova Scotia resident Gerald Cotten — died while travelling in India, leaving his company without access to much of its cryptocurrency.

His widow, Jennifer Robertson, has said in court documents that Cotten was the only person with access to his laptop, which is thought to contain the digital keys to the cold wallets.

Cold wallets are offline storage devices protected by encryption technology. Cryptocurrency exchanges typically use them to store the bulk of their digital assets, which puts them beyond the reach of online hackers.

Hot wallets are online sites that store smaller amounts of cryptocurrencies, making them readily available for trading — a practice akin to using a currency float in a cash register.

The latest twist in the QuadrigaCX case is sure to feed rampant online speculation about the company’s dealings. Court documents have pointed to persistent rumours about Cotten’s death and threats aimed at his widow, who lived with Cotten just outside of Halifax.

Aside from the cold wallet snafu, Ernst and Young also reported that there is more than one laptop at the centre of the case.

Electronic devices recently retrieved from an encryption expert working for QuadrigaCX include: two active laptops; two older model laptops; two active cellphones; two dead cellphones; and three encrypted USB flash drives.

As well, steps have been taken to retrieve Cotten’s desktop computer from his home office in Fall River, N.S.

Michael MacDonald, The Canadian Press

Like us on Facebook and follow us on Twitter

Just Posted

Mischievious characters take the stage in Seussical: The Musical

Langley’s Ahnika Barber and Lauren Trotzuk are performing the classic stories of Dr. Seuss.

A community with eight Toastmasters groups hosted the annual B.C. conference

Jim McGregor has worn many hats through the year, from father and… Continue reading

Olympic auditions return to Langley

An opportunity for unknown competitors to shine and, maybe, change sports

Langley Anti-SOGI activist slams ban on dad speaking out about transgender son’s case

A judge has told the father to stop publicly objecting to his son’s gender

Langley firefighter climbs World Trade Centre in honour of 9/11 fallen

The local man is fundraising for the Memorial Stair Climb

What’s age got to do with it? B.C. couple with 45-year gap talks happy marriage

An Armstrong couple that has 45-year age gap began turning heads after being featured on show Extreme Love.

Child, 11, accidentally shot in chest by 13-year-old in southern Alberta: RCMP

Child taken from Hutterite colony to nearby hospital Monday

Ceremonies, vigils planned in Toronto to honour victims of deadly van attack

Many of those who helped that day — first responders and Good Samaritans alike — still affected

Easter bombings a response to New Zealand attacks, says Sri Lanka minister

The Islamic State group asserted it was responsible for the nine bombings

PHOTOS: New commemorative loonie marks progress’ for LGBTQ2 people

But advocates say it mistakenly suggests equality has been achieved largely as a result of government actions

Man charged in fatal Salmon Arm church shooting to appear in court

Matrix Savage Gathergood charged with first degree murder, aggravated assault

RCMP looking to retrace steps of woman found dead on Kelowna beach

Caitlin Midori Bradley, a 29-year-old dancer at a Kelowna bar, was originally from Surrey

Two back-to-back earthquakes strike off Vancouver Island

The first earthquake happened at 1:27 p.m., the second at 2:44 p.m.

5 to start your day

Gas prices continue to remain high, torched SUV in Vancouver linked to shooting and more

Most Read