• March 29, 2024
 Millions In Cryptocurrency Lost With Sudden Death Of CEO

Millions In Cryptocurrency Lost With Sudden Death Of CEO

An estimated £105 million of cryptocurrency belonging to investors has been lost following the death of a cryptocurrency exchange company boss.

Gerald Cotten died suddenly aged 30 in December 2018 after suffering complications arising from Crohn’s disease during a visit to India. His death certificate has recently been issued, following some speculation as to the validity of reports of his passing.

Cotten had sole access to cryptocurrency belonging to investors in his firm Quadriga CX, which was stored in offline cryptocurrency storage known as cold wallets, intended to be impenetrable to hackers.

Despite cybersecurity experts now having access to the storage hardware, without the passwords, the currency is lost. Cotten appears to have failed to leave any instructions to be followed in the event of his death, clearly unexpected at such a young age.

Cotten’s widow, Jennifer Robertson, has stated that she was not involved in the business during her husband’s life, saying:

“I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.”

Quadriga CX traded in Bitcoin, Litecoin and Ethereum and has been unable to pay out money belonging to its 115,000 customers since Cotten’s death. Operations were closed at the end of January, with Robertson filing for creditor protection on its behalf. Ernst & Young have been appointed as monitor to oversee proceedings and protect customers’ rights.

The case highlights the importance of inheritance planning in the digital age. Will writers need to make sure clients plan fully for their electronic estate, including identifying all assets and leaving instructions for accessing them.

This should really involve a detailed step-by-step guide, as cryptocurrency is still a mystery to many. Steps that may need to be outlined include accessing funds via the hardware, sending them to an exchange, trading them for conventional currency and arranging for transfer to a linked bank account.

Information that your executors will need includes usernames, passwords, PINs, keys and two-factor authentication (2FA) codes for each cold wallet and exchange platform. If possible, those with substantial cryptocurrency holdings may want to take their relatives through a trial run to make sure they can handle the actual exchange, the trickiest part of the process.

The alternative may be losing substantial holdings or having to pay cybersecurity experts to assist if access proves difficult.

As a Will writer, do you think those with cryptocurrency holdings have made sufficient arrangements for the transfer of funds in the event of their death? If not, how could they be encouraged?

Toni Ryder-McMullin

Toni is the Media Officer for Today’s Conveyancer, Today’s Wills & Probate and Today's Family Lawyer. I worked for a law firm for 16 years, during my time at the firm I worked as a company commercial legal secretary for 7 years but changed careers and moved into marketing for the remaining 9 years – where I covered all aspects of marketing. While in the marketing role, I achieved a CIM Professional Certificate in Marketing and CAM Diploma in Digital Marketing.