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Home Cryptocurrency

QuadrigaCX Exchange Disaster Takes a Sinister Turn

by admin
February 4, 2019
in Cryptocurrency
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QuadrigaCX Exchange Disaster Takes A Sinister Turn Cryptonews

QuadrigaCX Exchange Disaster Takes A Sinister Turn Cryptonews

In a severe blow to cryptocurrency’s public image, the Canadian cryptocurrency exchange, QuadrigaCX,  declared that they lost access to some user funds. Ostensibly, this occurred as a result of CEO Gerald Cotten’s untimely death in December. Cotten’s widow, Jennifer Robertson, announced that her late husband was the sole source of access keys for the exchange’s cold storage wallets.  This meant that a majority of user’s funds were now irrecoverable and permanently lost.

Understandably, the user base for Quadriga is furious. Due to a poorly handled chain of responsibility, they’ve lost funds totaling over $150 million USD. At first, this appeared to be a non-malicious accident through poor management. However, investigators are beginning to uncover some suspicious activity that suggests otherwise. Mounting evidence appears to show a new form of cryptocurrency heist.

Suspicious Wallet Activity

Despite Robertson’s claim that the cold wallet was inaccessible, users soon rooted out the addresses for Quadriga’s cold storage. In doing so, they discovered something suspicious; funds were rapidly moving out of the exchange’s Litecoin wallet. Reddit user “whereMyCryptoAt” outlined the exact sequence of events, including multiple major Litecoin moves that prove at least one key is not lost at all. If Gerald Cotten is truly the only person with access to these keys, then ipso facto, he must be the one moving the funds.

Source: CryptoNewsZ
Source: CryptoNewsZ

This calls into doubt the entire official scenario presented by Quadriga’s remaining officials. Gerald Cotten, who has been living in India, may have faked his own death in the ultimate cryptocurrency exit scam. Other suspicious activities came to light in the wake of the scandal – including a massive amount of Bitcoin liquidation. Over the past seven months, QuadrigaCX had sold off nearly $13 million in Bitcoin for unknown reasons. In the best of circumstances, QuadrigaCX had been acting in bad faith long before Cotten’s death. However, the worst-case scenario is now looking the most likely – the CEO of the exchange escaped with millions in stolen cryptocurrency.

Regulation vs Decentralization

The original cryptocurrency fanatics thrived on the idea of decentralization. They wanted a currency free from government regulation – but that comes at a price. Without the involvement of an authoritative third party, there is no insurance or security against fraud. When regulatory bodies are involved, it helps mitigate the damage caused by failures like QuadrigaCX. Even if the funds were lost solely due to mismanagement, there would be some layer of protection to help prevent a total constructive loss for investors.

The new generation of cryptocurrency investors understands this fact. Many of the major exchanges are voluntarily applying financial regulations to appear attractive to institutional investors. On the opposite end, decentralized exchanges are removing the human component entirely – another secure way of preventing a QuadrigaCX disaster.

Article By: Adam Stone

Tags: BitcoinblockchainBTCBTC newsCanadaCanada bitcoincold storagecryptocrypto exchangeCrypto exit scamcrypto heistcrypto jackingCryptocurrencycryptocurrency exchangecryptocurrency newscryptonewsdigital currencyemerging growthEthereumGerald CotteninvestinginvestmentLitecoinLTCnewsQuadrigaCXSpotlight GrowthSpotlight Growth Stockstechtrading
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