The former Quadriga CX CEO Gerald Cotten died suddenly this year, taking the keys required to access cryptocurrency funds belonging to investors with him.
Now, these same traders, devoid of millions in investment, have requested that the body of the firm’s former CEO be exhumed to confirm his death.
The story of Cotten’s passing exploded in February when it emerged the former executive was the only one in possession of the passwords required to access Quadriga CX cold wallets, containing roughly $250 million in cryptocurrency.
Once the owner passed away in India due to reported complications with Crohn’s disease, the assets were deemed lost, leading to the Canadian cryptocurrency exchange to file for Companies’ Creditors Arrangement Act (CCAA) protection — and later instigate bankruptcy proceedings.
“We did not enter into this decision lightly,” Quadriga CX said. “We have worked extensively to address our liquidity issues, which include locating our very significant cryptocurrency reserves held in cold wallets required to satisfy customer cryptocurrency balances on deposit and sourcing a financial institution to accept the bank drafts being transferred to us. Unfortunately, these efforts have not been successful.”
The company was able to continue operating for a number of weeks after the chief executive passed away, but once the news was made public by his widow, Jennifer Robertson, the exchange’s operations rapidly unraveled.
Ernst & Young is now overseeing liquidation proceedings.
The cold wallets were only accessible through Cotten’s laptop, and while attempts were made to obtain access including hiring external IT specialists and an extensive search for a paper copy of the credentials, none have borne fruit.
Reddit subthreads mentioning the cryptocurrency exchange are alight with conspiracy theories and it appears that some former traders do not believe that the former CEO is dead — suggesting that instead, Cotten is still alive and is living off the proceeds of an unusual form of exit scam.
Investors are now demanding concrete proof of his passing.
In a letter (.PDF) dated 13 December, representatives of the users that have lost access to their cryptocurrency as appointed by the Supreme Court of Nova Scotia — where Quadriga CX used to call home — lawyers from Miller Thomson LLP and Cox & Palmer have asked that the Royal Canadian Mounted Police (RCMP) perform an exhumation of his body.
See also: DoJ arrests Ponzi operators planning to retire ‘RAF’ through cryptocurrency scam
No autopsy was requested at the time of Cotten’s death. Now, a post-mortem examination has been requested to confirm the body belongs to Cotten, who died aged 30, as well as his cause of death.
The representative counsel says the procedures should take place “given the questionable circumstances surrounding Mr. Cotten’s death and the significant losses of affected users.”
In addition, the letter says there is a need for certainty “around the question of whether Mr. Cotten is in fact deceased.”
The legal team hopes the exhumation and autopsy can be completed by early 2020, as noted by The New York Times. The lawyers claim time is of the essence, citing “decomposition concerns.”
A lawyer for his widow told the publication Robertson was “heartbroken” to learn of the request.
In June, the Federal Bureau of Investigation (FBI) sent out a request asking former QuadrigaCX users to fill out a questionnaire as part of an investigation into the firm, conducted with the Internal Revenue Service Criminal Investigation (IRS-CI), the United States Attorney’s Office for the District of Columbia, and the Department of Justice (DoJ).
TechRepublic: Survey: Customers want integration and strategic support from security vendors
An Ernst & Young report into the financial workings of Quadriga CX has also raised some troubling issues. According to the monitor, the cryptocurrency exchange’s operating infrastructure was “significantly flawed,” with Mr. Cotten “failing to ensure adequate safeguard procedures were in place to transfer passwords and other critical operating data to other Quadriga representatives should a critical event materialize.”
In addition, Ernst & Young was unable to find any accounting or basic corporate records separating company and investor funds.
CNET: How we evaluate and review VPNs
Last month, cryptocurrency trading platform Upbit revealed the theft of $48.5 million in Ethereum (ETH) from the organization’s hot wallet. Upbit has pledged to cover the stolen funds, and after the suspension of trading for several weeks, normal services have begun to resume.
Previous and related coverage
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The Five Pillars of (Azure) Cloud-based Application Security
This 1-hour webinar from GigaOm brings together experts in Azure cloud application migration and security, featuring GigaOm analyst Jon Collins and special guests from Fortinet, Director of Product Marketing for Public Cloud, Daniel Schrader, and Global Director of Public Cloud Architecture and Engineering, Aidan Walden.
These interesting times have accelerated the drive towards digital transformation, application rationalization, and migration to cloud-based architectures. Enterprise organizations are looking to increase efficiency, but without impacting performance or increasing risk, either from infrastructure resilience or end-user behaviors.
Success requires a combination of best practice and appropriate use of technology, depending on where the organization is on its cloud journey. Elements such as zero-trust access and security-driven networking need to be deployed in parallel with security-first operations, breach prevention and response.
If you are looking to migrate applications to the cloud and want to be sure your approach maximizes delivery whilst minimizing risk, this webinar is for you.
Data Management and Secure Data Storage for the Enterprise
This free 1-hour webinar from GigaOm Research brings together experts in data management and security, featuring GigaOm Analyst Enrico Signoretti and special guest from RackTop Systems, Jonathan Halstuch. The discussion will focus on data storage and how to protect data against cyberattacks.
Most of the recent news coverage and analysis of cyberattacks focus on hackers getting access and control of critical systems. Yet rarely is it mentioned that the most valuable asset for the organizations under attack is the data contained in these systems.
In this webinar, you will learn about the risks and costs of a poor data security management approach, and how to improve your data storage to prevent and mitigate the consequences of a compromised infrastructure.
CISO Podcast: Talking Anti-Phishing Solutions
Simon Gibson earlier this year published the report, “GigaOm Radar for Phishing Prevention and Detection,” which assessed more than a dozen security solutions focused on detecting and mitigating email-borne threats and vulnerabilities. As Gibson noted in his report, email remains a prime vector for attack, reflecting the strategic role it plays in corporate communications.
Earlier this week, Gibson’s report was a featured topic of discussions on David Spark’s popular CISO Security Vendor Relationship Podcast. In it, Spark interviewed a pair of chief information security officers—Mike Johnson, CISO for SalesForce, and James Dolph, CISO for Guidewire Software—to get their take on the role of anti-phishing solutions.
“I want to first give GigaOm some credit here for really pointing out the need to decide what to do with detections,” Johnson said when asked for his thoughts about selecting an anti-phishing tool. “I think a lot of companies charge into a solution for anti-phishing without thinking about what they are going to do when the thing triggers.”
As Johnson noted, the needs and vulnerabilities of a large organization aligned on Microsoft 365 are very different from those of a smaller outfit working with GSuite. A malicious Excel macro-laden file, for example, poses a credible threat to a Microsoft shop and therefore argues for a detonation solution to detect and neutralize malicious payloads before they can spread and morph. On the other hand, a smaller company is more exposed to business email compromise (BEC) attacks, since spending authority is often spread among many employees in these businesses.
Gibson’s radar report describes both in-line and out-of-band solutions, but Johnson said cloud-aligned infrastructures argue against traditional in-line schemes.
“If you put an in-line solution in front of [Microsoft] 365 or in front of GSuite, you are likely decreasing your reliability, because you’ve now introduced this single point of failure. Google and Microsoft have this massive amount of reliability that is built in,” Johnson said.
So how should IT decision makers go about selecting an anti-phishing solution? Dolph answered that question with a series of questions of his own:
“Does it nail the basics? Does it fit with the technologies we have in place? And then secondarily, is it reliable, is it tunable, is it manageable?” he asked. “Because it can add a lot overhead, especially if you have a small team if these tools are really disruptive to the email flow.”
Dolph concluded by noting that it’s important for solutions to provide insight that can help organizations target their protections, as well as support both training and awareness around threats. Finally, he urged organizations to consider how they can measure the effectiveness of solutions.
“I may look at other solutions in the future and how do I compare those solutions to the benchmark of what we have in place?”
Listen to the Podcast: CISO Podcast
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