QuadrigaCX’s online wallets for bitcoin and ethereum have nearly been emptied and the funds sent to the failed cryptocurrency exchange’s court-appointed monitor, Ernst & Young (EY).
On Feb. 14, 52 bitcoin (BTC) and 960 ether (ETH) were sent to freshly created blockchain addresses from addresses identified earlier as belonging to the Canadian exchange.
The amounts matched the balances that EY had previously said it found in the exchange’s “hot” wallets, meaning the active ones connected to the internet.
And on Thursday, EY confirmed that, as expected, it had taken control of the funds by transferring the crypto from QuadrigaCX’s accounts to the professional services firm’s own cold wallet, stored offline.
“The Monitor will hold the cryptocurrency in cold storage pending further order of the Court,” the report added.
Each of the QuadrigaCX wallets appears to have sent a test transaction before transferring over the bulk of its funds on Feb. 14.
For example, the ethereum address that was listed in the court filing as the exchange’s hot wallet for that cryptocurrency first sent 0.01 ETH that day, and two hours later 960 ETH, to an address that saw no other transactions.
Similarly, the group of bitcoin addresses that eagle-eyed blockchain watchers had previously identified as belonging to QuadrigaCX sent 0.01 BTC, and then two hours later 52.6 BTC, to a new address that, again, saw no other transactions.
Some of those sending addresses were earlier involved in a costly blunder: the accidental transfer on Feb. 6 of 104 BTC ($500,000 CAD) to QuadrigaCX’s cold wallets, which the company claims are inaccessible because only its late founder, Gerald Cotten, controlled the private keys.
Now, after that six-figure mistake and the subsequent intentional transfer of 52 BTC to a new address, the hot wallet group is holding altogether less than 0.5 BTC.
In safer hands
QuadrigaCX, previously the largest Canadian cryptocurrency exchange, went offline in January, following prolonged issues with banking, stalled customer withdrawals and the reported death of its founder and CEO Gerald Cotten in December.
The Supreme Court of Nova Scotia then granted QuadrigaCX creditor protection, issuing a 30-day stay of proceedings.
Cotten’s widow Jennifer Robertson said in her affidavit to the court that he had single-handedly managed transfers between the exchange’s wallets and that after his death the access to cold wallets was lost.
Even before the 104-bitcoin mishap, Nova Scotia Supreme Court judge Michael Wood suggested that the hot wallet funds be sent to the safety of new cold wallets maintained by EY.
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