IAGON Talks: Controlling Access Keys for Exchanges

In a never before seen and jaw dropping oversight, it is being reported that Canadian-based QuadrigaCX is currently missing roughly CA $190 million in digital currency and additional assets. As first reported by Canadian news outlet The Globe and Mail on February 1st, 2019, this comes following the unexpected death of the QuadrigaCX Founder Gerry Cotten, who happened to be the sole holder of the necessary access keys for all of the cold wallets.

Since the time of Cotten’s death on December 9th, 2018, QuadrigaCX has been unable to satisfy customer needs, as the firm has lacked the ability to gain access or even locate the missing funds. In what was an attempt to ensure that their clients’ assets were protected, QuadrigaCX consistently stored the majority of their assets in cold wallets in order to proactively fight theft and hacking. These wallets are offline storage systems that are secured through the use of digital keys that match up to their corresponding wallets, which you would think was a failsafe way to ensure top notch security. This, however, is where the problem begins, as Cotten took the keys to the grave with him.

Although the newly minted liquidity issues have given cause for the QuadrigaCX to file for creditor protection in compliance with the Companies’ Creditors Arrangement Act, there is still a lot of information that needs to be sifted through, prior to reaching a decisive conclusion to this tortured tale. Information that may slowly begin coming to light following the preliminary hearing that is currently scheduled for Tuesday, February 5th, 2019, as stated on the old QuadrigaCX website, which has been replaced by a landing page containing a short message from the QuadrigaCX Board of Directors.

With all of this being considered, we were curious as to what others opinions on the matter may be. How safe is it to be a sole holder to the recovery keys associated with an exchanges cold wallets?

In our opinion… Not very safe at all.

And this isn’t simply because of the reality of situations such as the one at QuadrigaCX, but also because that leaves room for potential criminals to come in and cause harm to the sole holder themselves, and/or their family in order to gain access to a funnel of millions of dollars.

Whatever the case may be, we are hoping that this gets settled quickly for the sake of those affected and we look forward to hearing your thoughts on the matter.

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