QuadrigaCX granted creditor protection while it searches for $250M in cryptocurrency

One of Canada's largest cryptocurrency exchanges has been granted an order for creditor protectionin Nova Scotia Supreme Court, following the reported sudden death of its 30-year-old founder, Gerald Cotten.

Justice Michael Wood gaveQuadrigaCX a 30-day stay of proceedings in a bid to stop any lawsuits from proceeding against the company at this point.

The company's lawyer, Maurice Chiasson, told the court QuadrigaCXwants timeto search for roughly $250million Cdn in assets left inaccessible after Cotten's death.His widow said he died suddenly in India due to complications from Crohn's disease on Dec. 9while opening an orphanage. The couple owneda homeoutside Halifax.

The death of the company's CEO and sole director has left roughly 115,000 users without their funds.Lawyers for some of the affected users were in the Halifax court today.

Court filings show that some have very large balances, with the largest affected user claim reportedly valued at approximately $70 million.

QuadrigaCXemployees saythe only way to access much of the cash was lost when Cottendied.

'Could be gone forever'

Cotten 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.

"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," QuadrigaCXcustomerElvis Cavalictold CBC's As It Happens.

It appears the way toaccess the cold walletswas not left behind with Cotten's wife, the executor of hisestate, Cavalic said.

If the money was in a cold wallet, it could be gone forever, said Nikhilesh De, a reporter for CoinDesk, a publication that covers digital currencies.

"The idea behind cold storage is that they're inaccessible unless you have the appropriate keys and the access and coins havebeen lost in the past," said De.

"There will only be a finite number of bitcoins ever issued, and any bitcoins that are lost are lost forever."

Cotten'sencrypted laptop will be given to lawyers acting for the creditors and will be eventually given to a court-appointed monitor.

Lawyers for QuadrigaCX said in court on Tuesday they are considering a possible sale of the company to satisfy debts.

CBC reporter Jack Julian live blogged from the courtroom Tuesday.

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