'The bigger mystery is why anyone trusted Quadriga in the first place': The story of the CEO who died with the passwords to $190 million of cryptocurrency is getting stranger by the day

AP/Mark J. Terrill

• The sudden death of the boss of a crypto exchange in India gets stranger by the day.
• Quadriga CEO Gerald Cotten died suddenly from complications related to Crohn's disease at the age of 30, the company said earlier this month.
• Cotten was the only person with the passwords to access about CAD$250 million ($188 million) worth of deposits held by customers.
• The sheer amount of missing funds, as well as several odd circumstances surrounding Cotten's death, have led to theories he faked his death in an elaborate scam to rob his customers.

The mystery surrounding the sudden death of a crypto exchange bossm

QuadrigaCX CEO Gerald Cotten died suddenly in India of complications related to Crohn's disease at the age of 30, the company said earlier this month.

His widow, Jennifer Robertson, said in an affidavit that he was the only one with Quadriga's passwords, meaning some 115,000 clients can't access their deposits. Quadriga's users are collectively owed about CAD$250 million ($188 million).

The sheer amount of missing funds, as well as several odd circumstances surrounding Cotten's death, have led to theories he faked his death in an elaborate scam to rob his customers. Among a few reasons some crypto watchers are scratching their heads:

• With a proper treatment plan, the risk of death from Crohn's disease is currently about 3%.
• Cotten's will was signed on November 27, less than two weeks before his death on December 9.
• Even before Cotten's death, the company had transaction delays and legal disputes led to millions of dollars being frozen.

But those concerns aside, there's also the unusual way that Quadriga was run. As Canada's Globe and Mail reports, the company was essentially a one-man show.

"Perhaps the bigger mystery is why anyone trusted Quadriga in the first place," the Globe and Mail wrote.

"Quadriga had no physical office, no corporate bank accounts or even an accounting department. Mr. Cotten employed only a small team of contractors. Cryptocurrency exchanges in Canada are not regulated. No one was watching over the company."

Read more: A crypto exchange can't repay $190 million it owes customers because its CEO died with the only password

Before his death, Cotten shifted the crypto holdings into "cold storage," offline physical devices that allow protection from thieves and hackers, his widow said. Those transactions paralyzed the funds, Robertson said, as Cotten was the only one with access. Robertson's attempts to hire consultants to help crack the code have so far been unsuccessful, she said.

"The Quadriga story doesn't make sense," Emin Gün Sirer, a professor at Cornell University and co-director of the Initiative for CryptoCurrencies and Contracts, told Bloomberg.

"If the funds are frozen and the cold wallet is inaccessible, it should be possible for the exchange to provide the cold wallet addresses so their claims can be verified with the help of the blockchain."

Bloomberg also talked to an analysis firm called Elementus, which said that it couldn't find any cold wallets holding Ether, one of the cryptocurrencies that's listed as missing, and that Quadriga was moving Ether to bigger trading platforms through the middle of January.

Did the exchange set up automatic transfers to larger exchanges when its wallet balances reached a certain amount?

It's possible.

Or, Elementus founder Max Galka told Bloomberg, it could be that "there's some fishy business going on."

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