As It Happens

Calgary man loses $15K in bitcoin after cryptocurrency exchange founder dies

Elvis Cavalic's $15,000 in bitcoin may still be locked up in a virtual safe. But it seems no one has the key.

QuadrigaCX says customers' money is in a digital vault — and only Gerald Cotten had the key

Cryptocurrency investor Elvis Cavalic has roughly $15,000 stored with QuadrigaCX. (Elvis Cavalic )
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Story transcript

Elvis Cavalic's $15,000 in bitcoin may still be locked up in a virtual safe. But it seems no one has the key. 

Cavalic and tens of thousands of others had entrusted their cryptocurrency to Canada's largest online exchange, QuadrigaCX. The company has filed for creditor protection and closed down its website — which held an estimated $250 million Canadian dollars in cryptocurrency.

QuadrigaCX claims the only way to access much of the cash was lost when the company's founder, Gerald Cotten, died in India in December.

He was apparently the only person with the recovery code to access the currency held in secure "cold wallets" — where the company kept much of its customers' money. 

Elvis Cavalic spoke to As It Happens host Carol Off. Here is part of their conversation.

I know you were a client with Quadriga. What do you make of the news that, well, the founder is dead and the company appears to be in serious financial trouble?

Well, it's hard to say because they — for the longest time going back to December — they have kept us in the dark and we are missing so many details. So at this point, most of what I feel is speculative because we don't have answers. 

According to court documents Gerald Cotten, chief executive officer of QuadrigaCX, died Dec. 9 in India due to complications from Crohn's disease. Now the company he founded is embroiled in legal and financial struggles. (Gerry Cotten memorial/Facebook)

This man, Gerald Cotten, who was the founder of this company — only 30 years old — he was apparently working in India doing charitable work when he died from complications from Crohn's disease. How is it that nobody can get access to the money?

So, the cryptocurrency exchanges are usually held on two different types of wallets. There's the hot wallet — which if you were going to compare it to a store, it's like a cash register. It's the float. It's the money needed to carry out the day-to-day interactions with customers.

And then the cold storage, comparable to a store, would be like a safety deposit box or a bank account. It's secured. So with a cold storage wallet, it's completely offline. It's not connected to the servers or the infrastructure set up by the exchange. It's usually a physical device that you would plug into a computer and requires a button to be pressed and it might need a password. 

So the cold storage keys or the password or the access or the existence of it or the location of it, for whatever reason, was not left behind with the [executor of his] estate — his wife.

To a lot of people it's strange, because two weeks before his death he had left a will leaving what is said to be a plane, two houses, and $100,000 for the care of his two Chihuahuas. Why wasn't there a conversation had over that if there was a conversation over the dogs? 

There are conspiracy theories that he's not dead, right?

That is true. But I think it doesn't really matter. Obviously, it does matter — but what does it change for the situation? If he was to be, let's say, faking this, it's not something you do unless something really bad happens, right? So I don't think it really changes the game for what's going to happen to our money. 

There is no oversight [of cryptocurrency]. If these kind of sums are involved here then where are the regulators, where is the oversight? 

I don't know. I think it's ... a no-brainer. Money's involved and we're trusting individuals like Gerald who ... held no book-keeping, no records, there were no audits.

I was naive enough to think, well, you know, what are the odds that someone, someone is playing me here, right? And that's probably what everyone thinks and why there is no oversight? Great question. 

Q&A edited for length and clarity. Written by Chris Harbord. Interview with Elvis Cavalic produced by Jeanne Armstrong.

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