Exchange firm given time to unlock $137m in cryptocurrencies

A court in Halifax, Nova Scotia, on Tuesday granted 30 days’ time to Canada’s leading crypto-currency exchange to release US$137 million in digital tokens such as Bitcoin, Litecoin and Ether from the company’s digital wallets after its founder died without sharing the password with anyone to unlock them.

The stay comes after the Vancouver-based Quadriga CX sought creditor protection on Jan 31 to prevent any legal action while it tries to tackle the issue.

Besides the $137 million in digital coins, Quadriga CX owes $53 million in currency to some 115,000 users.

Court filings show QuadrigaCX has been facing liquidity issues.

Angry investors suspect their money is lost amid speculations on social media that the founder of the start-up, Gerald Cotton, above (Photo credit: Handout), may have faked his death to pass it to his wife’s account.

According to one claim, Cotten updated his will weeks before his death and named his wife Jennifer Robertson as the sole executor of it.

Some social media users claimed outgoing transactions from QuadrigaCX even after Cotten’s death.

Cotten’s wife is facing threats and abusive comments. However, she has provided the Halifax court with a copy of his death certificate.

Cotton, 30, died of Crohn’s disease on December 9 in India where he had gone to open an orphanage.

The board of directors of QuadrigaCX informed clients last month that it is facing serious financial issues. It said attempts to hack the system and free the tokens have failed.

Robertson said in court filings that her husband was so concerned with security issues that he did not share the password to transfer clients’ money even with her.

Currently, no mechanism exists to regulate cryptocurrencies. The incident will further lower consumer confidence in them.