Cryptocurrency

Lawyers Demand Proof That QuadrigaCX Founder Is Really Dead

Quadriga’s Quagmire Looks To The Great Beyond

Perhaps call it “habeas corpus” of a different sort.

In Latin, the term translates to “you have the body.”

And in a court of law, it means bringing the accused, in person, before a court or judge prior to imprisonment

This time around, in a cryptocurrency arena that is known for twists and turn, it’s a “habeas corpus” of a literal reading – the one that seeks to bring a body, interred, above-ground.

Should it happen, it’s a bit of a ghoulish event – and it may not go all that far toward solving the case of the missing QuadrigaCX crypto millions.

As has been widely reported, there’s been a bid to exhume the body of Gerald Cotten, the deceased cryptocurrency exchange founder.

Cotten, you may recall, was the CEO of QuadrigaCX, the exchange that went bust in January 2019 after Cotten died at the end of 2018 while on his honeymoon. He was apparently the sole holder of the passwords that would have unlocked the “cold storage” that held about $163 million USD equivalent of cash and cryptocurrencies.

Bloomberg noted this weekend that a number of conspiracies have swirled about Cotten’s death – and whether he may not actually be dead. In the meantime, over the past several months, the Federal Bureau of Investigation (FBI), the Department of Justice’s Computer Crime and Intellectual Property Section and the U.S. Attorney’s Office for the District of Columbia have all been looking into the matter, which has left more than 76,000 users in the dark about what happened to their cash, bitcoin and other digital coins. Quadriga is now going through bankruptcy.

The demand for the body now comes from Miller Thomson LLP, which is representing those customers. The firm aims to establish that Cotten is the body, the body is Cotten and the manner of his death, amid what the attorneys term “questionable circumstances” noting that “publicly available information … highlight[s] the need for certainty around the question of whether Mr. Cotten is in fact deceased.”

Time is of the essence, said the attorneys, due to decomposition.

The lawyers’ demands seem to imply doubt about the reports of Cotten’s death slightly more than a year ago from complications of Crohn’s disease, as sworn by affidavit by his widow and a statement of death from a Halifax funeral home.

But they also show a few other trends in crypto-land: the fact that there – but for the grace of God and a few passwords – can go an individuals’ life savings. The fact that a single person died – or absconded – with the information needed to access those funds shows a lack of operational controls that may also plague other crypto firms.

As Ernst & Young reported in June, in its monitor report tied to Quadriga’s bankruptcy filing, “typical segregation of duties and basic internal controls did not appear to exist,” and that the company does not appear to have visibility into its own profitability (if any). There have been “limited books and records available to review, limited parties with institutional knowledge … and the complexities of blockchain analysis coupled with limited reliable data” with which to grapple.

The rules, regulations and standardization of crypto exchanges (and crypto in general) have yet to be established on a scale wide enough to keep fraud – or, in some cases, inadvertent losses – from happening. And until such standardization happens, may we suggest another Latin term?

Caveat emptor.

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