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 Leo Jakobson , February 4, 2019

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

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.

Leo Jakobson is a New York-based journalist who has spent much of the last 15 years covering the employee engagement and recognition business. Before that he covered the East Coast side of the Internet boom and bust, and wrote about politics in New York City. Disclosure: Jakobson owns no cryptocurrencies.