The bind that QuadrigaCX, once one of Canada’s largest Bitcoin exchanges, has found itself in has rattled the crypto industry for weeks on end. For those who missed the memo, the Vancouver-based company lost its founder, Gerald Cotten, to Crohn’s in mid-December. Cotten’s unfortunate death left the exchange’s finances in shambles, as the remaining employees claimed that they were unable to access $150 million in Bitcoin, Ethereum, Litecoin, among other digital assets.
It was assumed that the private keys to this stash, owned by QuadrigaCX’s thousands of clients and custodied by the platform, were lost to the ether on Cotten’s bricked laptop. But, blockchain research has revealed that this might not be the case.
Part Of QuadrigaCX’s Stash Located
James Edwards, the editor of Zerononcense, an up-and-coming blockchain publication focused on unveiling questionable events in the cryptosphere, recently issued an in-depth piece that outlined where QuadrigaCX’s Ethereum (Ether) holdings are currently.
Edwards, the go-to researcher for information pertaining to QuadrigaCX’s multi-week imbroglio, noted that there’s a “very strong possibility” that Kraken, Bitfinex, and Poloniex, three of the world’s largest crypto upstarts, hold (or once held) a majority of the ‘lost’ Ether.
The researcher, also known as Proof Of Research on Twitter, claims that 649,708 Ethereum tokens, valued at over $100 million at their transfer date, have found their way onto the three aforementioned exchanges. Corroborating his claim, Edwards laid out a number of transactions he flagged, along with their respective addresses, in a bid to determine how the now-defunct Canadian exchange managed its customer holdings.
Part of James Edwards Research, Image from Zerononcense
QuadrigaCX skeptic Jesse Powell, the Bay Area-based CEO of Kraken, vehemently denied that his company holds any Ether pertaining to the exchange, citing updated blockchain data to back his point.
Thus, Edwards, also drawing attention to information from Taylor Monahan of MyCrypto, analytics boutique Elementus, and his own research, noted that he’s 99% sure millions in Ethereum remain on customer accounts at Bitfinex and Poloniex, based in Hong Kong and the United States respectively. It is unclear whether the accounts were owned by the now-deceased Cotten’s, a QuadrigaCX employee, Cotten’s widow, or another group.
However, as QuadrigaCX’s purported Ether cold addresses stopped sending outgoing transactions on December 8th, a day before Cotten’s reported death, it can be assumed that the company founder had sole access to the accounts.
Regardless, if the Zerononcense editor is accurate, that means that more likely than not, the two exchanges could bend the rules to send Ethereum the way of Canadian courts, so this debacle could finally begin to see some resolution. As of the time of writing, representatives from both Poloniex and Bitfinex have yet to respond to Edwards’ noticings.
Not Cut And Dried
While the evidence laid out by Edwards point towards the fact that Poloniex and Bitfinex could theoretically resecure the millions in crypto, it is unclear why the exchanges have yet to pipe up. As there are ongoing lawsuits against QuadrigaCX, mainly for its inability to manage crypto holdings and its seeming incompetency, some claim it would only be logical for platforms involved to contribute their insight. But as per public records, this has yet to come to fruition.
More likely than not, there are clear legal uncertainties about this case, as QuadrigaCX’s fracas is evidently the first of its kind. But, creditors of the exchange should begin to sleep well. The plausible theory that over half the funds lost still exist, even if they’re under the control of another entity, could indicate that there are other Cotten-owned accounts that hold the lost Bitcoin.
This hasn’t gone unnoticed. As reported by Blockonomi earlier today, Jesse Powell of Kraken recently put out a $100,000 bounty for information pertaining to the lost QuadrigaCX funds. So, the question that remains on everyone’s mind is — will Powell’s rallying cry spark the uncovering of ground-breaking information?