Cryptocurrency

How Cryptocurrency Investors Lost $190 Million And What Can We Learn From It?

How Cryptocurrency Investors Lost $190 Million And What Can We Learn From It

You probably heard of the infamous QuadrigaCX exchange story. People have lost $190 Million during this misfortune, which has put a dark light on the cryptocurrency space once more. We will go over all the intricate details of this nightmarish story and see what we can learn from it.

QuadrigaCX was a Canada-based cryptocurrency exchange. The CEO of the crypto exchange supposedly died and took all of the investor’s funds with him. Then the firm went bankrupt and published a notice on their website. They asserted that they are experiencing massive liquidity issues and can’t pay their customers. The reason for this is the loss of their cold storage cryptocurrency wallets, which held customer money.

“Dear Customers, today an order for creditor protection in accordance with the Companies’ Creditors Arrangement Act (CCAA) was issued to allow us the opportunity to resolve outstanding financial issues that have affected our ability to serve our customers.”

Cryptocurrency Exchange QuadrigaCX’s First Appearance

The first time this, now notoriously known exchange hit our radar, was approximately six months ago. The exchange disabled user’s account and froze his funds worth roughly $720,000 at the time.

Many reckon QuadrigaCX as a bad actor since these events look suspicious and strange. So most of the community puts QuadrigaCX’s name alongside events like the Mt.Gox exchange and the DAO hack.

Ledger Nano S - The secure hardware wallet

Although, no one denies that freezing customer assets without any warning or explanation isn’t sound. We can argue that the exchange user himself is at least partially guilty for this incident. As the famous crypto spokesman Andreas Antonopoulos would say:

”Your Keys, Your Bitcoin. Not Your Keys, Not Your Bitcoin”.

Toshi Times strongly advises taking control of your private keys. Don’t risk losing your funds by leaving them on exchanges. Cryptocurrency hardware wallets like Trezor or Ledger are very suitable to keep your coins safe.

CEO’s of QuadrigaCX Death In India

Gerald Cotten, CEO of QuadrigaCX supposedly died in India of cardiac arrest. Taking all of his customers funds to the grave. Cotten reportedly arrived at the hospital in critical condition, and with pre-existing Chron’s disease.

Cotten suffered not one but two cardiac arrests in the hospital. The medics managed to revive him the first time, but they weren’t successful the second. Unfortunately, according to official sources, QuadrigaCX’s CEO passed away. The Indian government issued a death certificate as proof.

“Despite the best efforts of our clinicians the patient could not be revived and was declared dead approximately at 7:26 pm. All standard medical procedures and guidelines were followed to treat the patient. The information of his death was communicated to the relevant authorities.”

The story would end here, but it didn’t because $190 Million are still missing. Also, the reportedly sole person who could access those customer funds is gone.

Investors Are Sceptic About This Incident

After Cotten’s death, the cryptocurrency exchange sought creditor protection in the Canadian court. Moreover, they received 30 days with a probability to extend it, to meet their debt obligations. Ernst & Young was appointed as an independent third party auditor to supervise the proceedings.

Platform users weren’t thrilled with these events. Also, had their suspicions that this might be a scam. They expressed their opinions all over social media platforms wanting more evidence that his death indeed happened. Many suggested that it is not that hard to fake an end in India.

To further user suspicions, Bloomberg released an article revealing that Cotten has filled a will 12 days before his death. Odd, isn’t it? Maybe he knew that his sickness would get the better of him. However, that’s just hard to believe. Every sensible person would seek help and would find ways to recover. This event can be a coincidence. Alternatively, a well thought out plan to steal millions of dollars worth of crypto? Unfortunately, we can’t know for sure.

James Edwards, a cryptocurrency analyst, has looked into this confusion. He claims to have reviewed the exchange’s publicly available transactions. Edwards concluded that there aren’t any cold storage wallets that QuadrigaCX claims to have.

“It appears that there are no identifiable cold wallet reserves for QuadrigaCX,”

Jesse Powell, CEO of the cryptocurrency exchange Kraken expressed his disbelief on the legitimacy of this matter:

What Can We Learn From This?

Some people believe this story; some don’t. We can’t know for sure what really happened, but what we can do is learn from it. Cryptocurrency exchanges get hacked, it’s disappointing, but that’s the reality today. We can’t change that, but we can take some measures to secure our funds.

Cryptocurrency hardware wallets are an excellent tool for that. If you want your crypto to be safe, you need to own your private keys! You can never know what exchange will be hacked or scammed next. Don’t trust others with your funds! Most popular cryptocurrency hardware wallets like Trezor or Ledger will do a great job. Choose the one you prefer. They are not hard to use. Stay safe!

Image Source: “Pexels”

Ledger Nano S - The secure hardware wallet