More than $145m in cryptocurrency is inaccessible to its owners, after the sudden death of the 30 year old founder of Canada’s largest cryptocurrency exchange, Quadrig.
The company says that the millions of dollars’ worth of cryptocurrency can’t be accessed because CEO Gerald Cotten was the only person with the recovery codes needed to withdraw the currency held in secure cold wallets.
A cold storage wallet is completely offline. It is not connected to the servers or the infrastructure set up by the exchange. In Quadriga’s case only the CEO had the cold storage keys / password / access and the location of the cold storage wallet.
Cotten’s death has set off a storm of controversy in the cryptocurrency world, with some believing that his death is a fake.
With many commentators saying that the Quadriga story has arisen as a result of cryptocurrency being thinly regulated, people with crypto wallets are anxiously wondering how best to protect their own crypto investments. There are clearly many suspicious (and inept) platforms.
The Quadriga case highlights the need for cryptocurrency regulation. “We are very much in favour of regulation and we are actively working with a number of central banks and financial regulators, including the SA Reserve Bank, to drive regulation for cryptocurrency. Regulation will provide consumers or potential consumers with the comfort that the service they are dealing with is held to defined regulatory standards. Imposing regulations will, in turn, enhance general trust in and stability of the market,” says Marius Reitz, Luno’s GM: Africa.
Here are six questions to ask before signing up for a cryptocurrency exchange
- Do I trust the team building the product or service?
- Do they understand and implement secure key storage?
- Do they have a strong technical and engineering background?
- Do they have security features like two-factor authentication or integration with security partners?
- Do they undergo regular security and financial audits?
- Do world-class investors back the company?
When choosing whom to trust with the safety of your cryptocurrency, do research about the company. “If the answers to the above questions aren’t readily available for you to access, search for a company that is more transparent,” concludes Reitz.