CEO of crypto exchange QuadrigaCX dies, freezing access to investors' $250 million

The death of QuadrigaCX CEO Gerald Cotten has captured headlines around the world.

That's because the Vancouver company's founder was the only person with the passwords for about $250 million locked up in its cryptocurrency exchange.

According to a statement on Facebook by his wife and executor, Jennifer Robertson, Cotten died from complications from Crohn's disease on December 9, 2018, while travelling in India.

On February 5, QuadrigaCX announced that it has filed for protection from its creditors under the Companies' Creditors Arrangement Act.

Coindesk has reported that Robertson has Cotten’s laptop but can’t gain access because it’s encrypted. She doesn’t have the password.

In the meantime, a court-appointed monitor, Ernst & Young, will act as an independent third party overseeing claims from creditors.

Back in 2014, QuadrigaCX launched Vancouver's second Bitcoin ATM in Vancouver. At the time, Cotten was a director of the Vancouver Bitcoin Co-op.

"To a newbie, I would describe it as a decentralized, peer-to-peer payment system," Cotten told the Straight in 2014. "It basically allows you to send payments from one user to another without the need of a central authority, such as a bank."

At the time, Cotten expressed concerns about the lack of government regulations around cryptocurrencies.

"From an exchange point of view, this is quite frustrating, because you’re trying to figure out what the regulations are," he said. "We’re quite proactive when it comes to regulations. We don’t want to break the law. We want to fully comply, and we actually more than comply with what the current laws are.

"So, a bit more clarification from FINTRAC and from the federal government would be very useful—just in terms of planning our business for the future."

Flash forward five years and the lack of regulation has many Canadians freaked out about what might have happened to money they invested through QuadrigaCX.

There were already some warning signs before the recent problems hit the news.

In April 2018, the CoinIQ website offered a critical review of the QuadrigaCX exchange, noting that three directors and the chief financial officer had all resigned in 2017.

That reportedly occurred around the time that a software problem allegedly led to the loss of US$14 million in the Ether cryptocurrency.

Moreover, CoinIQ noted that QuadrigaCX’s last public financial audit was published back in September 2015.