In a bizarre incident, a Canadian cryptocurrency exchange was unable to repay $250 million to clients after its CEO passed away during a recent trip to India. The exchange called QuadrigaCX informed that its CEO Gerald Cotton was the only one who had security keys and passwords needed to access customer funds.
While the Supreme Court of Nova Scotia has approved the company’s request for protection against creditors and the appointment of a third-party firm for exploring a possible sale, investors remain highly suspicious of the company’s processes.
Cryptocurrency exchanges have lost money accounting to hacks and scams but this is the first-of-its-kind incident where a company has lost keys to its customer funds. According to the ET report, QuadrigaCX had 363,000 users with $180 million in cryptocurrency and $70 million in Canadian Dollars.
This incident shows the importance of proper key management even for exchanges. Exchanges simply cannot vest so much power in one person. They need to have checks and balances to ensure that such incidents do not occur on their platform. Also, it is yet another reminder to investors that they should store their cypto assets on their own wallets where they have control of the private keys instead of relying on exchange wallets.