No Access To £110 million Due To Lost Cryptocurrency Passwords
No access to £110 million due to lost cryptocurrency passwords.
The recent financial difficulties of a Canadian company are a timely reminder to think about your digital assets and accounts to ensure they can still be accessed even when you are no longer around.
Gerald Cotten, the CEO and sole director of cryptocurrency exchange company, QuadrigaCX, died suddenly on 9 December during a trip to India. His death has left the company unable to repay $190 million (£110 million) to its clients as he was the only person with knowledge of the online passwords to access their funds.
The $190 million consists of both cryptocurrency and standard money and is held in "cold storage", which means it is stored in online wallets accessible by digital keys. It is the company (specifically Mr Cotten), rather than the client, who has control over the funds. As a result, no-one has been able to access the accounts.
Mr Cotten left a Will which included a provision that his wife, Jennifer Robertson, was authorised to access his digital assets to "obtain, access, modify, delete and control passwords and other electronic credentials." She is the executor of her husband’s estate and has access to his laptop but has insisted she cannot access the online wallets as she does not know the passwords. A technical expert has also been unable to bypass the encryption.
On 5 February, the Nova Scotia Supreme Court granted QuadrigaCX protection from its creditors and a 30-day stay of proceedings for the company to find the missing currency and arrange to restructure or sell the business. Some of its clients have threatened Ms Robertson online and also accused the company of lying in an effort to avoid repaying the money.
This case is an unfortunate reminder of how many assets we now mainly or solely access digitally; which can sometimes be overlooked or forgotten about. Whilst it is not sensible to make a note of all of your online passwords, especially as they may change quite frequently, it is helpful to make a list of your online accounts or assets so that your executors will at least be aware of them when you are no longer around. If you are in the same position as Mr Cotten, it may be sensible to share relevant passwords or security questions with at least one other trusted person to ensure access if something were to happen to you.
To discuss any of the issues raised above, please contact a member of the Private Client team on 01384 410410.