For anyone who missed the original story, the founder of the QuadrigaCX cryptocurrency exchange died unexpectedly, and took with him the keys to $150m or so of customers' funds. A few commentators...
For anyone who missed the original story, the founder of the QuadrigaCX cryptocurrency exchange died unexpectedly, and took with him the keys to $150m or so of customers' funds.
A few commentators at the time suggested a scam, although most mainstream coverage did not. I was actually quite surprised how restrained most coverage was, given that failing to keep a second copy in the hands of a bank used to dealing with those kind of sums seems borderline negligent.
It's now emerged that the wallets were emptied some months ago, so the most plausible options seem to be either that the founder faked his death, or that the money was stolen (with or without his complicity) and he was killed to prevent the information from getting out. Anything else, while possible, would present a pretty spectacularly unlikely coincidence.
I posted a comment about this on HN the other day: I haven't really followed it closely, but a lot of the circumstances seem to lead to that. Someone linked me to this tweet thread from Coinbase's...
I posted a comment about this on HN the other day:
I also think he's probably not dead, but I don't think he absconded with the holdings. I think it's a slightly different situation: there aren't any significant holdings left, and haven't been for a while. I think he already spent/lost almost everything they had, expecting that crypto would go up and everything would work out. Then it went down and stayed down, his plans blew up, and he knew he was screwed and could never pay the users back.
That is, I don't think it's an exit scam, I think it's a desperate attempt to hide a massive failure in running the exchange. The "we can't access the cold wallets any more" was intended to be a believable excuse that would explain why they couldn't return people's money.
I'm going to quote Matt Levine's comments about this from his newsletter almost a month ago too, both because I think they're funny and they also talk about one of the really weird logical...
I'm going to quote Matt Levine's comments about this from his newsletter almost a month ago too, both because I think they're funny and they also talk about one of the really weird logical disconnects with a lot of the cryptocurrency hype:
“It is extremely likely that there aren’t any cold wallets,” one analyst told the Journal. I suppose if you’re a customer you are rooting for this outcome: If the money was stolen, there’s a chance that investigators can find some of it and get it back; if it was really locked in a cold wallet on a laptop and then the only person with the password died, then it could be gone forever. You’re better off dealing with a dishonest larcenous exchange than an honest one that takes security too seriously. (And dies, I mean.)
I’m sorry, I know that this is just the most boring and obvious cliché about cryptocurrency, but still I have like a physical need to say it: If you are a believer in the power of cryptocurrency, if you like its promise of trustless decentralized money, why did you entrust millions of dollars of your money to one guy with a laptop? One guy with a laptop! Ooooooh it was “the largest crypto exchange in Canada,” sure, but it was also one guy with a laptop, and he died and bricked the laptop and now your money is gone. (Or he didn’t and it’s stolen, or some other dumb combination of those things.) “I don’t trust the banks, but this chap from the internet seems nice, and he has a laptop, I’m sure he can hold my money for me, and what are the odds that he’ll die suddenly?” Gahhhhh come on.
This is not how it works! Either you have some sort of stable trustworthy regulatory and investor-protection framework so that you can go to any reputable intermediary and assume that it will do what it says it will do, or you have to do your own careful due diligence on any intermediary before choosing to trust it. But no one seems to have done the diligence of, like, showing up at Quadriga CX’s headquarters/house and asking “wait where are the rest of you,” in the same way that I’ve never gone to Valley Forge, Pa., to make sure that the Vanguard Group is actually there. The problem is that people think they don’t trust the traditional financial system, but in fact its most basic functionality — not forgetting where it put your money — is so reliable that people just keep assuming without evidence that the crypto system must work the same way. Surely a big crypto exchange must have, like, systems, and lawyers, and more than one employee, so you can trust it, right? Wrong! If I ever buy Bitcoins I will keep them at Gemini, the Winklevoss twins’ exchange, just because I am absolutely sure there are two of them.
Elsewhere, the guy with the laptop, Quadriga CX founder Gerald Cotten, “filed a will 12 days before his death listing substantial assets,” including a yacht and an airplane. And at a Canadian court hearing yesterday, the court was shown a picture of Quadriga’s bank drafts, which were kept on a stove, next to a lit candle, which feels a little heavy-handed as a metaphor. A Quadriga lawyer said that they’re now “off the stove,” though that doesn’t help any with unlocking the laptop.
For anyone who missed the original story, the founder of the QuadrigaCX cryptocurrency exchange died unexpectedly, and took with him the keys to $150m or so of customers' funds.
A few commentators at the time suggested a scam, although most mainstream coverage did not. I was actually quite surprised how restrained most coverage was, given that failing to keep a second copy in the hands of a bank used to dealing with those kind of sums seems borderline negligent.
It's now emerged that the wallets were emptied some months ago, so the most plausible options seem to be either that the founder faked his death, or that the money was stolen (with or without his complicity) and he was killed to prevent the information from getting out. Anything else, while possible, would present a pretty spectacularly unlikely coincidence.
I posted a comment about this on HN the other day:
I haven't really followed it closely, but a lot of the circumstances seem to lead to that. Someone linked me to this tweet thread from Coinbase's CEO that seems to support it as well.
I'm going to quote Matt Levine's comments about this from his newsletter almost a month ago too, both because I think they're funny and they also talk about one of the really weird logical disconnects with a lot of the cryptocurrency hype:
(from here)