$180M in cryptocurrency still missing as Quadriga's cold wallets come up empty

Cold wallets that were supposed to hold up to $180 million of Quadrigaclients' money have been empty since last April, according to blockchainexperts at court-appointedmonitorErnstand Young.

The information comes from the third report of the monitor filed Friday inNova Scotia Supreme Court.

The cryptocurrency exchange QuadrigaCX collapsed after its founder, Gerald Cotten, died suddenly in December on a trip to India. It was granted creditor protection on Feb. 5.

In its most recent report, the monitor detailedefforts of its blockchain experts to trace the electronic trail of cryptocurrency in and out ofsix cold wallets initially identified by Quadriga as a likely repository for funds held on behalf of roughly 115,000 clients.

The monitor said that between 2014 and 2018,the six wallets were found to have an average aggregate balance of 124 bitcoin. The highest aggregate balance was 2,776 bitcoin.

Accounts emptied in April

The monitor saidthose accounts were emptied in April2018,"bringing the balances down to nil."

The only deposit made to those cold wallets since was last month, when someone at Quadriga accidentally transferred $488,000 of bitcoin into the locked wallets instead of sending it to the monitor.

So far, the company has"been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Wallets for deposits," the report said.

Ernst and Young saidthree other potential Quadriga cold wallet addresses have been identified, but provided no further detail.

The monitor saidthat some of the bitcoin in the six empty wallets appears to have been transferred to other cryptocurrency exchanges. The monitor is contacting those exchanges to get transaction information for those accounts.

The report also revealedthat 14 user accounts "may have been created outside the normal process by Quadriga... It appears that the Identified Accounts were created under various aliases."

"The Monitor was further advised that deposits into certain of the Identified Accounts may have been artificially created and subsequently used for trading on the Quadriga Platform," the report said.

The report saidthose 14 accounts were associated with"a significant volume of transaction activity, including trading and withdrawals of cryptocurrency to wallet addresses not associated with Quadriga."

Monitor asks court to force release of data

Meanwhile, Amazon Web Services hasrefusedto release a full copy of Quadriga's trading and client data to the monitor.

The cloud backup accounts were heldpersonally in Gerald Cotten's name, and Amazon Web Services saidconsent from Cotten's widow and heir, Jennifer Robertson of Halifax, isn't enough.

The monitor hasaskedfor a court order to force the release of the data.

"It is imperative that a copy of the Quadriga Platform Data is backed up and secured with the Monitor as soon as possible," the report said.

Quadriga's 30-day period of creditor protection under the Companies' Creditors Arrangement Act is set to expire Thursday.

However, the monitor has indicatedsupport forQuadriga's request for an extension of 45 or 60 days, saying the company has"worked with due diligence and good faith since the Filing Date." Representative counsel for Quadriga's 115,000 clients have requested a 30-day extension be approved.

All parties will be in court for a hearing Tuesday at Nova Scotia Supreme Court in Halifax.

Robertson declined to comment on the report through her lawyer RichardNiedermayerof StewartMcKelveyin Halifax.