The controversial crypto exchange, QuadrigaCX, most likely stored much of their Ether (ETH) on other crypto exchanges, according to a new report released on February 28th by crypto research and consulting firm ZeroNonCense. The report was corroborated by Kraken CEO, Jesse Powell and MyCrypto CEO, Taylor Monahan.
Per the report, the roughly 650,000 ETH that belongs to Quadriga were stored on the crypto exchanges Kraken, Bitfinex, and Poloniex while Quadriga was up and running. When the cryptoassets were sent to these exchanges, the value of the funds was over $100 million.
After its founder Gerald Cotten died suddenly on a trip to India in December 2018, Quadriga has not been able to access its cold wallets where it stored the majority of its cryptoassets, as Cotten was, apparently, the only person who held the private keys. Despite repeated efforts to recover the the private keys, they have not been found. (There is some legitimate speculation that Cotten have stored the company’s private keys in a safety deposit box, but that notion is as of yet unconfirmed.) In total, the exchange is missing about CA $190 million (US $145 million).
The ZeroNonCense report notes that, given Cotten’s widow Jennifer Robertson’s sworn affidavit that neither she nor company employees know where the private keys are located, there is a possibility no one except Cotten knew exactly where the company funds were being stored. However, Robertson also claimed in her affidavit that Cotten may have stored Quadriga’s funds on the exchange.
A report by Ernst & Young (also known as EY, and a Big Four audit firm) released yesterday claimed that Quadriga’s cold wallets have been empty and unused since April of last year. This meshes well with the notion the funds were stored on other exchanges instead.
The ZeroNonCense report then elaborates:
“if funds are positively located, the knowledge of private keys or passwords would not be necessary to retrieve them. Given the extraneous circumstances, it stands to reason that the above-listed exchanges would be more than willing to facilitate the transfer of these funds back to QuadrigaCX so that they may be redistributed to their customers.”
In other words, if the funds are indeed stored on other exchanges, it would be a big win not only for Quadriga, which is facing insolvency, but its users.