Skeleton Bitcoin
A really tiny skeleton and bitcoin (via Pixabay).
Bitcoin

For one cryptocurrency exchange, too much security may be as damaging as too little

The sudden death of QuadrigaCX’s CEO may have locked $137 million away forever

By  / February 4, 2019 /

Billion-dollar cryptocurrency hacks get a lot of publicity, but customers of one Canadian exchange are finding out the hard way that there’s such a thing as too much security.

According to an affidavit first found by Coindesk and filed in the Supreme Court of Nova Scotia, Canadian cryptocurrency exchange QuadrigaCX CEO Gerald Cotton was the only person with the password to the company’s offline cold wallet. He doesn’t seem to have written it down or shared it with anyone else.

If the encryption cannot be broken, his death appears to have left the owners of $137 million in Bitcoin, Bitcoin Cash, Bitcoin Cash SV, Bitcoin Gold, Litecoin, and Ethereum as out of luck as if a hacker had cleaned them out. A computer expert the company brought in has had no luck so far, the Jan. 31, 2019 filing claim, according to the affidavit by Jennifer Robertson, Cotten’s widow.

Another $30 million stored by QuadrigaCX on a number of exchanges has not been lost, but will be tied up in court proceedings.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.