Ernst & Young’s Examination Of Missing Funds From QuadrigaCX Continues Down The Rabbit Hole

QuadrigaCX Exchange Seems To Have No Funds Stored In Cold Storage Wallets

The Canadian exchange QuadrigaCX that announced it lost close to $150 million in cryptocurrencies seems not to have funds in its cold storage wallets. According to a recent report released by Bloomberg, the cold storage wallets the exchange used are empty since April 2018.

QuadrigaCX Cold Storage Wallets Are Empty

This is a very important event that shows that the exchange had problems with the funds of its users even before the owner of the platform died in December. There are 115,000 customers that have lost their funds and do not know what will happen with them in the future.

Since February 5, the company has been under creditor protection and Ernst & Young has been dealing as a monitor under the process. However, the information released by the monitor on Friday seems to bring troublesome news for the platform and its customers.

The audit firm identified six separate cryptocurrency wallets that were used to store Bitcoin (BTC). This was the most used virtual currency on the platform. However, it seems that there have been no deposits in the wallets since April 2018, with the exception of a transaction of nearly $500,000.

The report reads as follows:

“To date, the Applicants have been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Cold Wallets for deposits in April 2018, however, the Monitor and Management will continue to review the Quadriga database to obtain further information.”

The report explains that EY is trying to get third-party payment processors to transfer the fiat holdings to QuadrigaCX as soon as possible. However, the audit firm did not provide much information on the matter. This report shows that QuadrigaCX did not use these cold storage wallets for a long period of time.

EY explained that they will be conducting further research in order to review the Quadriga database and obtain further information about users’ funds. The firm did not inform whether there might be other Bitcoin cold storage wallets related to the exchange. They also did not report anything regarding cold storage wallets holding Ethereum (ETH), Litecoin (LTC) or any other of the coins listed on the platform.

The owner of the exchange, Gerald Cotten, died in December due to complications related to Crohn’s disease. Cotten has also set up an account with Amazon Web Services in order to store information related to the exchange. AWS explained to EY that they cannot provide data regarding Cotten’s account in the platform. This is why EY is requesting a court to order to compel AWS to provide access to EY and Quadriga.

EY wants to find information such as records of transactions that could be able to verify the accounts and balances that Quadriga controlled. This will be assisting EY to keep with its investigation and provide a clearer answer to users that lost their funds. EY believes that extending the stay of proceedings implemented to protect Quadriga from investor lawsuits is also an appropriate decision.

There have been several cryptocurrency exchanges that were hacked and lost part of the funds they owned. This is something that the cryptocurrency community must deal with. There are some platforms that are trying to protect users’ funds with other innovative methods. Nevertheless, the best way to store users’ funds is through a cold storage wallet… unless the owner of the exchange does not share the information about it.

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