Cryptocurrency mystery deepens as $143m from dead owner's bitcoin wallet goes missing

Canada's largest cryptocurrency exchange closed operations at the end of January following the unexpected death of its chief executive

The mystery surrounding hundreds of millions of dollars worth of missing cryptocurrency from the Quadriga bitcoin exchange has deepened, after investigators discovered a series of unexplained transactions.

Quadriga once served as Canada's largest cryptocurrency exchange but closed operations at the end of January following the unexpected death of Gerald Cotten, who served as the firm's chief executive.

His death on 9 December in India meant the Vancouver-based exchange was unable to pay 115,000 customers C$260 million (£148m) in bitcoin and other cryptocurrencies, according to court documents, as Mr Cotten had sole access to the digital wallets.

Accountancy firm Ernst & Young, which was appointed by the court to oversee the search for the missing funds, has so far been unable to track down the cryptocurrency.

Of the six wallets believed to be used Mr Cotten to store large sums of digital assets offline, five were found to be empty.

A report published by Ernst & Young on 1 March stated that the sixth wallet "appears to have been used to receive bitcoin from another cryptocurrency exchange account", though the figure was only a tiny fraction of the missing millions.

Mr Cotten's widow Jennifer Robertson stated in the report that the funds had been moved to so-called cold storage wallets "as a way to protect the coins from hacking or virtual theft".

This is common practice for major cryptocurrency exchanges, though industry experts say it is unusual for the passwords needed to access the cod storage wallets to be kept by just one person.

"Using a reputable custodian to hold the private keys outside the company is perhaps the best option to ensure these codes are not lost," Erik Wilgenhof Plante, CCO of the cryptocurrency exchange BeQuant, told The Independent in February. "A single person owning this information creates a huge vulnerability."

In a previous affidavit, Ms Robertson stated: "I do not know the password or recovery key [for the wallets]. Despite repeated and diligent searches, I have not been able to find them written down anywhere."

Mysterious transactions on the beleaguered cryptocurrency exchange Quadriga have baffled investigators (Getty Images)

The mystery may go even deeper, with some Quadriga customers raising questions about the circumstances of Mr Cotten's death, which was reportedly the result of complications relating to Crohn's disease.

“There are still a number of suspicious circumstances around Gerald Cotton’s reported death that need to be looked into," Steve Bunnell, a former US Department of Homeland Security General Counsel who now serves as a data security specialist at the LA-based law firm O'Melveny, told The Independent.

"But regardless of whether the custody of crypto on QuadrigaCX was mismanaged or whether there was something more nefarious involved, the situation highlights the importance for customers of dealing with crypto exchanges that are reputable and know how to safely custody cryptocurrency."