The QuadrigaCX cryptobirds cold wallets, the founder of which died, were empty

At the very beginning of February of this year, news was published on Habré that the founder and leader of the Canadian cryptobirji QuadrigaCX had died. His death has become a problem not only for family and friends, but also for all cryptobirds clients.

The fact is that only the founder had access to the cold storage, he did not disclose the password to anyone. And he literally took his secret to the grave. According to the widow of the deceased entrepreneur, clients of cryptobirds stored about $ 143 million in cryptocurrency and fiat on the company's wallets. It was believed that most of the amount is stored in cold wallets. But now it turned out that they are empty.

There are no funds for them since April 2018. All operations on QuadrigaCX ceased in January 2019, leaving more than 115 thousand users without deposits.

Since February 5, the company has been protected from creditors in the framework of bankruptcy proceedings. An application for protection was filed on January 31, 2019 by the company's board of directors.
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The widow of the deceased under oath said that there was only a minimal amount of cryptocurrency in the hot wallet. “As part of the normal procedure [the founder and CEO of QuadrigaCX, Gerald Cotten], moved most of the coins to cold storage to protect them from burglary or other virtual theft.” According to the auditors, the company's hot wallets are 51 BTC, 0.014 Bitcoin SV, 33 Bitcoin Cash, 2000 Bitcoin Gold, 800 Litecoin and 950 Ethereum.

The head of the company, being alive, well solved the issue of information protection. Attacks of attackers remained unsuccessful during the life of an entrepreneur. Whether cybercriminals succeed after his death is unknown - the question remains open.

Ernst & Young has begun to investigate the situation with customer operations. And the results were disappointing. The experts managed to find out that the manager placed the funds of the exchange on six cold wallets. Five of them have remained empty since April 2018 (then the entrepreneur was alive, and the exchange was actively working). The sixth wallet received funds from another exchange, after which the money went to a hot wallet from another cryptobirgy. It happened on December 3rd.

The fact that the entrepreneur used a cold wallet (or rather, six wallets) is not surprising. Many representatives of the world of cryptocurrency do the same to protect their own and client funds. Cold purses are usually referred to as physical devices that are disconnected from the network, which can be connected to a PC or laptop if necessary to transfer funds from a hot wallet or carry out a reverse transaction.

Investigation of experts showed that from April 2014 to April 2018, the volume of cryptocurrency on cold wallets was different - from 0 to 2776 bitcoins. On average, the volume of transactions per month was about 124 bitcoins. Part of the funds transferred to accounts in other exchanges. The last transaction from QuadrigaCX accounts was held a day before the owner’s death.

After finding out this information, Ernst & Young conducted an analysis of three more cold wallets, which, it seems, were used by the director of crypto-exchange to work with altcoins. But it turned out that there was nothing on them either. A further 14 user accounts were found that were used for operations and were not similar to regular user accounts.

A cryptographic platform based on Amazon Web Services (AWS). Earlier it was stated that the widow of an entrepreneur does not have access to the purses of the exchange. Ernst & Young has requested permission to access Quadriga accounts in a court of law in the interests of users.

In February, it was reported that customer funds held in fiat currency are safe. But their cryptobirth cannot receive due to legal claims of the Canadian Imperial Commercial Bank (CIBC). The payment processor Billerfy holds about 30 million Canadian dollars owned by customers of the exchange. Another operator WB21 is responsible for storing another 9 million Canadian dollars and 2.4 million US dollars. He also refuses to release funds or respond to messages from Quadriga.

The operator stated the following: “WB21 does not confirm the correctness of the balance sheets mentioned in the court testimony, and given the current legal situation of Quadriga, our compliance team has to restrict access to accounts until the investigation is completed.”

However, cryptobirds clients seem to have less hope of getting their money back. Some part, perhaps, will be returned (most likely, fiatnuyu). But about cryptocurrency confidence is much less.