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Bitcoin, other cryptocurrency holders’ funds in limbo as CEO with password dies in Jaipur

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[vc_row][vc_column][vc_column_text]At least C$190 million ($145 million) of investors in Bitcoin and other digital currency holders got lost in cyberspace after the chief executive of cryptocurrency exchange QuadrigaCX, Gerald Cotten, the only person with password and security keys to access the money, died suddenly while in Jaipur, India.

Cotten, 30, died of complications from Crohn’s disease on December 9.

While efforts to crack the code and retrieve the money have not yielded results yet, the Vancouver-based company had moved court seeking protection from creditors after weeks of attempting to “locate and secure our very significant cryptocurrency reserves” following Cotten’s death.

The company, QuadrigaCX, said in court filings that the CEO, Gerald Cotten, was the only person who knew the security keys and passwords needed to access the funds.

AFP reported that a Canadian court on Monday granted bankruptcy protection to the company. Another report said that the Supreme Court of Nova Scotia on Tuesday approved the company’s request for protection against creditors for 30 days and the appointment of accounting firm Ernst & Young to sort out Quadriga’s finances and explore a possible sale.

Cotten’s widow Jennifer Robertson said the company has been unable to access an encrypted computer that Cotten reportedly used to store the cryptocurrencies to 1,15,000 users. “I do not know the password or recovery key,” she said. “Despite repeated and diligent searches, I have not been able to find them written down anywhere.”

She added that an expert “has had some limited success in recovering a few coins and some information on Gerry’s cellphones and other computer, but not yet from the main computer he used to conduct business [with]”.

Robertson’s affidavit stated that Cotten’s laptop, email addresses and messaging system were encrypted to prevent them from being hacked, Bloomberg reported. Cotten was the only person in charge of funds and coins as well as the banking and accounting side of the business.

Cotten filed a will on Nov 27, 2018, 12 days before his death listing substantial assets, according to court documents, said a report on NDTV. He left all his assets to his wife, Jennifer Robertson, and made her the executor to his estate, the documents show.

The exchange, launched in December 2013, allowed users to deposit cash or cryptocurrency through its online trading platform, storing the digital coins on blockchain ledgers that are accessible only by an immutable alphanumeric code. The company had 363,000 registered users, of which 92,000 have account balances owing to them in cash or cryptocurrencies, according to court filings. Cotten was the sole officer and director.

The firm can’t retrieve about C$190 million in Bitcoin, Litecoin, Ether and other digital tokens held for its customers, nor can Vancouver-based Quadriga CX pay the C$70 million in cash those clients are owed.

Cotten was always conscious about security – the laptop, email addresses and messaging system he used to run the 5-year-old business were encrypted. He took sole responsibility for the handling of funds and coins and the banking and accounting side of the business and, to avoid being hacked, moved the “majority” of digital coins into what’s known as cold storage, or unconnected to the internet, the filing said.

The problem is, Robertson said she can’t find his passwords or any business records for the company. Experts brought in to try to hack into Cotten’s other computers and mobile phone met with only “limited success” and attempts to circumvent an encrypted USB key have been foiled, she said in the court filing.

The company’s inability to release its clients’ money has created an uproar among angry — and highly suspicious — investors.

While other crypto exchanges have lost their clients’ money, this appears to be the first one that has said it actually lost the keys to its accounts.

Some Quadriga clients who claim they’re owed money are pursuing their own legal avenues, including software engineer Xitong Zou of Orillia, Ontario. The client claims to be owed about C$560,000 from Quadriga — “one of the largest individual affected users” — according to the affidavit filed in a Halifax court on Feb. 5.

Xitong Zou and others are part of an informal committee of affected users that retained law firm Bennett Jones LLP and McInnes Cooper to represent them during the creditor protection proceedings.

Other customers named in the affidavit include: Tong Zou, with C$560,000 outstanding Epsilon One Pty Ltd., with C$1.04 million and $81,697 outstanding Matthew Leudy, with C$438,677 outstanding Benoit Gagne, with C$371,000 outstanding Block Trading Corp., with C$678,043 Tin Do, with C$525,000 and 523 Ethereum.

Quadriga’s platform went offline Jan. 28, and frustrated investors have taken to Reddit and Twitter to discuss their investigations into the company’s claims and potential lawsuits. Some questioned whether Cotten had indeed died — or whether, perhaps, he had faked his death to pull off what is known as an exit scam.

“The death came at a very odd time in the history of that company,” said Emin Gün Sirer, a professor at Cornell University and co-director of the Initiative for CryptoCurrencies and Contracts, according to a New York Times (NYT) report.

He noted that various online sleuths had been searching the blockchain, a ledger that can be updated by decentralized networks, for evidence of where Quadriga had stored its assets, but had found none, which raised red flags.

When it shut down, Quadriga’s platform had 363,000 users, and 115,000 of them had balances in their accounts: about $180 million in cryptocurrency and $70 million in Canadian currency, the court documents state. The exchange enabled trades of bitcoin, Litecoin and Ether, plus other types of cryptocurrency. The largest user claim was valued at about $70 million.

Quadriga was one of 237 widely recognized public cryptocurrency exchanges worldwide, Sirer told NYT. In terms of daily trade volume, it was ranked in the middle of the pack as of October, according to the website CoinMarketCap.

The exchange kept currency in “hot wallets,” which were connected to the internet and could quickly fulfill withdrawal requests, and “cold wallets,” which were kept offline and stored physically, such as on a USB stick, making them more secure, according to court papers.

Cryptocurrency investors, on social media and in interviews, questioned why a chief executive would be the sole point of access to such a vast sum.

In an initial report to the court, Ernst & Young wrote that it was facing an extraordinary set of case facts. Quadriga had no discernible accounting system and no bank account, according to the filing. Cotten typically sent directions to release payments, which were made through third-party payment processors, to employees by email, and payment inflows and outflows “were not systemically tracked,” Ernst & Young wrote.[/vc_column_text][/vc_column][/vc_row]

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Amid India-Canada diplomatic tensions, Justin Trudeau shares video of his Diwali celebrations

This comes a day after India expressed its concern over the reports of cancelled Diwali celebrations in Canada.

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Amid the ongoing diplomatic tensions between Canada and India over the killing of Khalistani terrorist Hardeep Singh Nijjar, Canadian Prime Minister Justin Trudeau on Sunday shared a video of his Diwali celebration on social media platform X.

Sharing a 44-second video of his Diwali celebrations on social media, the Canadian Prime Minister wrote, “Happy Diwali! So many special moments shared celebrating with the community this week.”

This comes a day after India expressed its concern over the reports of cancelled Diwali celebrations in Canada.

The Ministry of External Affairs spokesperson Randhir Jaiswal on Saturday, while addressing the media over Canada’s serious allegation against Union Home Minister Amit Shah’s involvement in the killing of Khalistani terrorist Nijjar, said it was unfortunate that the prevailing atmosphere in Canada has reached high levels of intolerance and extremism.

In the video, Prime Minister Trudeau showed off some colorful religious threads on his wrists, explaining that he received them during visits to three Hindu temples in Canada recently. He called them symbols of “good luck” and “protection,” adding with a smile, “I’m not taking them off until they fall off”.

Trudeau was also seen interacting warmly with the community, celebrating the festival, and enjoying delicious Indian sweets like jalebis, which he jokingly said he would “save for the team.”

On November 1, Trudeau posted on X, “Happy Diwali! Today, Hindu, Sikh, Buddhist, and Jain families will celebrate the triumph of light over darkness with festivities, candles, diyas, and fireworks. Wishing you all joy and prosperity during this special time.”

Addressing a press conference in Delhi, Jaiswal said India condemns the recent allegations made by the Canadian government against Shah that he was purportedly involved in the killing of Nijjar and called it “absurd and baseless”.

Jaiswal also said that India had summoned the Canadian High Commissioner on Friday to protest in the strongest terms for the references made to the Union Home Minister of India before the Committee by Canada’s Deputy Foreign Affairs Minister David Morrison.

On Tuesday, Morrison claimed that Shah orchestrated a campaign of violence, intimidation, and intelligence-gathering aimed at Sikh separatists on Canadian soil. He informed members of Canada’s national security committee in Parliament that he had confirmed Shah’s name to The Washington Post, which was the first to report the allegations. However, Morrison did not provide details on how Canada became aware of Shah’s alleged involvement.

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India, China complete disengagement in Depsang, Demchok at LAC after 4 years standoff

The Indian Army said that coordinated patrolling will start soon by both sides, and the ground commanders will continue to hold talks.

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India, China complete disengagement in Depsang, Demchok at LAC after 4 years standoff

In a significant development, India and China have completed the disengagement exercise in the Depsang and Demchok friction points at the Line of Actual Control (LAC) in eastern Ladakh. The troops of both the countries are now verifying the vacation of positions and removal of infrastructure.

Reportedly, the Indian Army said that coordinated patrolling will start soon by both sides, and the ground commanders will continue to hold talks. The two sides will exchange sweets for Diwali tomorrow.

Earlier, Foreign secretary Vikram Misri announced that New Delhi and Beijing reached an agreement to disengage in the remaining friction points at LAC in eastern Ladakh. After the agreement, the two countries began troops disengagement at the two friction points at Demchok and Depsang plains on October 23.

India-China relations worsened because of the Chinese troops’ aggression along the Line of Actual Control, the de facto border, in April 2020. It further deteriorated on June 15, 2020, after 20 Indian soldiers died in the line of duty thwarting the Chinese offensive in the Galwan Valley. New Delhi had said India’s bilateral relations with China will normalise only after the situation at the LAC returns to what it was before May 2020.

Reports said that the Indian Army and the Chinese People’s Liberation Army (PLA) have pulled back their forward-deployed troops and equipment from the two flashpoints, and have also dismantled temporary structures that had been built during the four-year-long standoff.

The Indian soldiers will resume their patrolling in areas that had been cut off because of the PLA’s presence. Nonetheless, the disengagement in Depsang and Demchok will not lead to the creation of buffer zones.

Both the countries had disengaged from Galwan Valley, Pangong Tso, Gogra (PP-17A) and Hot Springs (PP-15) areas and created buffer zones. Speaking to a newspaper publication, Lieutenant General Vinod Bhatia (retd), a former director general of military operations said that the disengagement at Depsang and Demchok will facilitate patrolling by both sides in a coordinated manner, and in the agreed upon frequency and strength of the patrolling parties.

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Iran says 2 soldiers killed in Israeli air strikes

Emphasising Iran’s right to self-defense under the UN Charter, the Iranian Foreign Ministry highlighted its obligation to counter foreign aggression.

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The Iranian Army said on Saturday that two of its soldiers were killed in Israeli air strikes that targeted military bases.

Iran stated that its air defenses effectively countered the attack, resulting in the unfortunate deaths of two soldiers and some areas suffering limited damage.

The Israeli military conducted strikes on Iranian military sites after 2 am on Saturday, responding to what they cited as ongoing attacks by Iran and its allies in the region.

Following the strikes, the Israeli military announced they had successfully completed the mission and achieved their objectives.

The Israel Defense Forces (IDF) confirmed the precise targeting of military sites in Iran to neutralize immediate threats to Israel.

“I can now confirm that we have concluded the Israeli response to Iran’s attacks against Israel. We conducted targeted and precise strikes on military targets in Iran — thwarting immediate threats to the State of Israel,” the Israel Defence Force posted on X.

Iran’s air defense headquarters acknowledged the hits on bases in Ilam, Khuzestan, and Tehran but asserted that these attacks were effectively repelled, with investigations ongoing to assess damages. Moreover, Iran indicated its readiness to retaliate against any Israeli aggression, stating that Israel would face proportional consequences for its actions.

Iran expressed its intentions to respond to the Israeli attacks on its military bases, condemning the actions as a violation of international law and the UN Charter’s principles on the use of force.

Emphasising Iran’s right to self-defense under the UN Charter, the Iranian Foreign Ministry highlighted its obligation to counter foreign aggression.

Pakistan strongly condemned Israel’s strikes on Iran, attributing the escalation to Israel and urging the UN Security Council to intervene for peace and security.

British Prime Minister Keir Starmer emphasised that Iran should refrain from retaliating against Israel, advocating for restraint on all sides to prevent further escalation.

“I am clear that Israel has the right to defend itself against Iranian aggression. I’m equally clear that we must avoid further regional escalation and urge all sides to restrain. Iran should not respond,” the PM said at a Commonwealth Heads of Government Meeting.

The United States advised Iran to halt its attacks on Israel to cease the ongoing violence and break the cycle of conflict, underlining the importance of de-escalation.

“We urge Iran to cease its attacks on Israel so that this cycle of fighting can end without further escalation,” U.S. National Security Council spokesman Sean Savett told reporters.

President Joe Biden was briefed on the Israeli operation throughout its development and execution by his National Security Adviser, Jake Sullivan.

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