Will QuadrgaCX Exchange Succeed in Compensating its Customers’ Loss?
The exchanges were the old form of today’s banks which undertook storing, converting and transferring money and currency. Although exchanges gradually disappeared with the advent of the banks, we see a kind of exchange today which works in the field of cryptocurrencies. What caused an exchange for becoming more popular than the others are the quality of services and security. It is certain that if an exchange faced a problem in providing security of the people’s deposits or there was a fraud, it would lose its prestige. Such news has existed since the advent of exchanges, and there have been a variety of bankruptcies, frauds and asset thefts. There are many different reasons why we observe such incidences, but it is absolutely clear that the range of these events is extensive and various. QuadrigaCX exchange has recently lost its access to its users which has made some serious problems for them.
A Californian Engineer Lost 422000 Dollar after Using QuadrigaCX Exchange
A Californian engineer lost all of his assets after using QuadrigaCX exchange to transfer money.
30-year-old Tong Zou has said in an interview with Bloomberg that he had started his withdrawal from QuadrigaCX since October 2018. According to him, he was going to take a trip to Canada during that time. Zou thought that he was able to save his money by using cryptocurrency exchanges to transfer it. Therefore, he bought Bitcoins in the U.S. and sent them to his account in QuadrigaCX exchange in Canada to avoid fast withdrawal of fiat. He told that he had not used this exchange for trading and just wanted to transfer money to his Canada account.
$190 Million Disappeared
The bankruptcy announcement of QuadrigaCX deadlocked Zou's withdrawal request and other 151 thousand people. This exchange announced that it had lost $190 million of its cryptocurrencies after its founder, Jerald Cotton, died in a humanitarian trip to India; this amount was at first announced to be $145 million though. Cotton was the only person who had access to QuadrigaCX’s cold wallet, an offline storage system. In order to avoid any kind of hack and cryptocurrency theft, these wallets act offline and are guarded by digital security keys. It is now stated that Mr. Cotton has been the only one who undertook the responsibility of these wallets and with his death, this company should set out to find mentioned wallets; however, waiting is a nightmare for the customers like Zou. He told Bloomberg that he had moved to Vancouver. However, now, that all of his assets have disappeared in QuadrigaCX, he cannot provide a suitable apartment. He intended to find a job to save his life at that time, but he came to no avail.
Zou told that this money had been all he had and he lived a life with his little remaining money and tried to restart again. This event took everything from him, and he is in a bad situation now.
Is Help on Its Way?
Zou and other QuadrigaCX users are cooperating with each other in their telegram channel. The victims asked Bennett Jones and Mclnnes Cooper to be their representative in Quadriga’s ongoing creditor protection proceedings in the Supreme Court of Nova Scotia. Their suggestions will be heard on February 14 at 09:30 local time.
State Security regulators in Canada are currently planning to know if they are responsible for investigating QudrigaCX or not. British Colombia security committee explained in the last hours of Friday that they didn’t do anything against QudrigaCX; however, 24 hours later, Ontario Security Commission (OSC) announced that they are investigating the matter. It was not known if the commission would start an official investigation on $190 million scandals or not.
The users accused QuadrigaCX to have used Cotton forged death to steal from their wallets. Moreover, Blockchain experts found out that it has not any offline wallet according to the users’ information and their withdrawal requests. Quadriga exchange received claims from the creditors and probable files on February 5. The exchange expects to retrieve the lost money through accessing to Cotton’s laptop.
It is said that Mr. Cotton was doing his daily activities by his encrypted PC at home. Jenifer Robertson, his widow, has said in reports that she didn’t know Cotton’s password and she was not successful despite all of her attempts. Even by hiring a cyber-security expert, Mrs. Robertson tried to hack his PC which was useless too. The asset of this exchange is just $286000, while it owes $198 million to its users.
Moreover, controlling all the assets of a cryptocurrency exchange by a CEO is very unusual and dangerous, since it turned Mr. Cotton to an aim of kidnapping and extortion; that is, you walk around the city with millions of dollars of cash in your pockets.
The reason why just one person had the responsibility of wallets and what is the end of these exchanges and their users’ assets are the questions no one has answered so far and are the victims’ worry.