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Highlighting some of the intricacies of how digital currency actually works, a recent story on ArmyOfBitcoin.com should make any investor a bit more wary of their crypto holdings. It appears that $190 million worth of cryptocurrency could be lost forever after the owner of the exchange holding this value died holding the sole password to its cold storage. The exchange was QuadrigaCX and the deceased owner was Gerald Cotton. The situation did not manifest itself until two months after his depth and, to date, there has been no resolution.
Cold storage is where cryptocurrencies such as Bitcoin are stored offline. This is done primarily as a security measure due to online cryptocurrency theft. Accessing the funds from cold storage requires passwords and other encrypted codes.
Quadriga’s woes for worried investors do not stop there. There were other reports that the exchange accidentally sent $370,000 of recovered bitcoin to the deceased owner’s crypto wallet. A complete investigation into the matter continues, but nothing has been resolved.
Back on March 5, a Canadian judge extended the stay of the proceedings for an additional 45 days until April 18. Until then, any investors claiming a loss in the matter will have to sit tight. After that time frame, it is still unclear what kind of legal remedies they can pursue against Quadriga. Investor’s biggest fear is that the cryptos may actually be gone as opposed to being trapped in cold storage.
One of the investors mentioned in this post was Bill Taso, a Toronto-based cryptocurrency trader. In an interview with ArmyOfBitcoin.com he gave an account of his dilemma. Taso said:
“I needed the cash so I just looked for the best price and thought this (Quadriga) is the best place to sell. It was just over one hundred thousand dollars ($78,400 US dollars) to pay down some mortgage and cover some other personal items.”
He sold his Bitcoin Cash (BTCUSD) shortly before 2 a.m. (ET) on Jan. 28. A few hours later, the website went down and it has yet to come back online.