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After Claiming Its Cold Wallets Were Inaccessible Due to CEO’s Death, QuadrigaCX Faces Allegations of Foul Play

Soon after announcing that its CEO, Gerald Cotten, passed away, the Canadian crypto exchange QuadrigaCX told customers that they could not access their funds. Now, angry people on the internet claim that the company is lying about access to the crypto assets and, possibly, Cotten’s death.

Losing a CEO and His Wallet Access

Last month, QuadrigaCX wrote on Facebook that Cotten “died due to complications with Crohn’s disease … while travelling in India, where he was opening an orphanage to provide a home and safe refuge for children in need.”

Soon after, it claimed that it could not repay the $190 million in client holdings following Cotten’s death because the cold wallets in which the funds were secured are only accessible through the late CEO’s personal computer, which is encrypted.

Then the Reddit crypto analyst CryptoMedication started a thread recruiting other users to find the exchange’s cold wallet addresses. This was critical, he wrote, because it would allow them to validate whether or not the wallets were secured with multiple signatures, determine how recently the wallets were active and find out what these wallets really hold.

Armchair Detectives

Reddit users quickly claimed to find wallets used by QuadrigaCX for cold storage and noted that funds were still being withdrawn despite the company’s claim that it could not access them without Cotten.

Eventually, the information discovered on public blockchains was compiled into a comprehensive account of QuadrigaCX’s wallets in a post, since removed from Medium, that made several dramatic claims. In addition to alleging that QuadrigaCX is in full control of its cold storage wallets, the report also claimed that QuadrigaCX does not have the $190 million needed to compensate customers.

Kraken’s co-founder and CEO Jesse Powell took to Twitter and called the affair a “bizarre and, frankly, unbelievable story” and encouraged Canadian police to cooperate with him in case of a subpoena. He also said that Kraken has “thousands of wallet addresses known to belong to [QuadrigaCX]” and that the company is conducting an independent investigation.

As expected, the online community is in an uproar over this development. Referring to previous cases of individuals going to India to illegally obtain fake death certificates, a Reddit user openly questioned the notion that Cotten had truly passed away.

QuadrigaCX’s account does appear to have a number of holes. It may take police involvement to uncover the whole truth and, if things continue in this manner, it will be only a matter of time until law enforcement becomes involved.

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