In the shadowy world of cryptocurrency exchanges, the rules are often a little hazy. So when news emerged that Gerald Cotten, the founder, chief executive, and sole keeper of the password codes to the Canadian QuardigaCX currency-exchange vault, died in India, more than a few eyebrows were raised.
The company announced the death of its 30-year-old boss, due to apparent complications of Crohn’s disease, on Jan. 15, even though a death certificate issued by the Indian government says he died Dec. 9. They say he was in the country to open an orphanage for needy children.
Two weeks after the death announcement, QuardigaCX filed for bankruptcy to protect itself from creditors, including around 115,000 customers who say they have some $140 million in assets in the company’s electronic vault. The company, which had 363,000 accounts (though many of them with zero balances) had been valued at around $190 million, with around $50 million kept in cash accounts that are still accessible.
Initially, the company said the cryptocurrency was “trapped” and that it had only filed for bankruptcy to buy some time while it tried to crack the code to what’s known as a “hot wallet” connected to the internet and the “cold wallet,” which is an offline account that was kept on Cotten’s laptop. QuardigaCX says it has not been able to unlock Cotten's computer to access the codes.
Now, according to The Wall Street Journal, those funds might actually be missing after two independent researchers found records that “QuadrigaCX transferred customer funds to other cryptocurrency exchanges.”
Cotten founded the Canadian company in 2013, and it has grown to become one of Canada’s largest in just five years. Several press reports have cited Canadian court documents showing that the last will and testament that Cotten signed was on Nov. 27, 2018—just 12 days before his apparent death. In it, he named his wife, Jennifer Roberston, who he lived with in Fall River, Nova Scotia, where the business was based in their home, as the executor of his estate, leaving her detailed instructions.
Toronto’s Globe and Mail reported that Cotten listed a complete distribution of his assets, including who got the airplane and what would happen to his properties in Nova Scotia and British Columbia. He even made plans for his chihuahuas, Nitro and Gully, allocating $100,000 for their care.
But somehow he apparently neglected to list the crucial codes that would unlock his vast crypto assets.
“I do not know the password or recovery key,” Robertsen said in an affidavit, according to the local Halifax newspaper The Chronicle Herald. “Despite repeated and diligent searches, I have not been able to find them written down anywhere.”
The local Halifax funeral home J.A. Snow provided a statement of death on Dec. 12 that allowed Cotten’s company to file for creditor protection, but his remains were not returned to Canada. Reporters from The Chronicle Herald petitioned all of the local funeral directors and none of them had dealt with Cotten’s remains.
Several conspiracy threads have started popping up on online entities including Reddit that have suggested that perhaps Cotten is lying on a beach waiting for his wife to join him, or that suggest that even his wife has no idea what the real truth is.
The company has taken the contents of its website offline, meaning customers can no longer access their balances. In its place, they have issued a lengthy letter and Q&A to try to calm investors and explain why they had to file for creditor protection for 30 days with the option to extend.
“Cold wallets, by their nature, are highly encrypted and were kept off the QuadrigaCX server for security reasons,” the letter states. “Gerry took sole responsibility for the handling of funds for QuadrigaCX and as such no one other than him can access the coins in the cold wallets.”
Undoubtedly, everyone will be watching to see if he does just that.