Cryptocurrencies are all the rage these days, and with stories of teenage-crypto-millionaires seeming to surface every other day a lot more people are trying to get in on the action. Unfortunately, as with any new industry, there are a lot of risks that come with it. Digital-asset exchange Quadriga CX just demonstrated that risk in the worst way.
Tragically, Quadriga CX Chief Executive Officer Gerald Cotten passed away unexpectedly at the age of the 30 in early December. To make things even worse, it turns out that Cotten was the sole person with access to $145 million in Bitcoin, Litecoin, Ether and other digital tokens.
According to Cotten’s widow the executive was always paranoid about security. He even went so far as to move the majority of the companies digital coins to a cold storage, meaning a server that was not connected to the internet in anyway. Unfortunately, when he passed he took the only keys to that cold storage with him.
“‘For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us,’ the firm told the Insurance Journal. ‘Unfortunately, these efforts have not been successful.’”.
With so much money at stake, this issue is not just going to resolve itself. If cyber-security experts are not able to gain access to the funds, Quadriga CX can expect to be the target of an onslaught of lawsuits.
If this story caused you to reflect on your businesses own cybersecurity protection, we encourage you to make sure you have the correct insurance policies in place. To learn about your current policy, or inquire about a new one, reach out to TGS Insurance at www.tgsinsurance.com.