[2019-03-14] The death of exchange’s founder exposes cryptocurrencies’ biggest

dunfida

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Quote from: drumamat on April 11, 2019, 05:37:30 AM

I'm surprised at the news.How can a cryptocurrency exchange give all passwords to only one person?This is absurd.If the users of this exchange knew about it, they would in no case use its service.Now I worry about my money.Suddenly, the Director of the exchange Binance also stores all the data on a flash drive, which is in his pants. Wink

A good thread to read off that might answer some of your questions, https://bitcointalk.org/index.php?topic=984498.new.

Thats the shady part on why only Cotten do have the access of all those keys and according to investigations it do reveal that this isnt really intended an exchange on the first place.
Too long to explain and better to read up that thread.

drumamat

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I'm surprised at the news.How can a cryptocurrency exchange give all passwords to only one person?This is absurd.If the users of this exchange knew about it, they would in no case use its service.Now I worry about my money.Suddenly, the Director of the exchange Binance also stores all the data on a flash drive, which is in his pants. Wink

webtricks

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Quote from: cybersofts on March 14, 2019, 03:07:04 PM

Quote from: o_e_l_e_o on March 14, 2019, 02:57:56 PM

Quote from: cybersofts on March 14, 2019, 01:09:49 PM

~~~

Oh my, exit scams everywhere. we should always stick with the top exchanges to avoid getting scammed by these perpetrators.

None of the exchange is safe, even the big names went scam in past.
Moreover, there are exchanges out there which although not wholly turned scam but are operating very shady such as HitBTC. So it is always preferable to use exchanges only for trade purpose, never ever hold funds on them. Also there is new trend growing among exchanges i.e. launching their own coin. Now I find this thing to be very risky for investors. Exchanges are already earning entities through trade fees, throwing them extra money by buying their coins is not a good idea from investors point-of-view. This model may survive in case of one or two big exchanges such as Binance (BNB) and KuCoin (KCS) as they have first-mover advantage but for other exchanges which are now adopting this idea, it leads to creation of liability which is not backed by any additional service. Moreover to lure investors, they promise fees sharing. All these things will backfire in future and such model will collapse.

cabron

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There are stories coming out that this is a planned heist like faking his own death. ITs been said withdrawals from the exchange are going to mixxers. And according to Bloomberg, Cotten this CEO of the said exchange signed his last will and testament in late November giving everything to his wife. There are just lots of things that doesn't add up to the story like he allegedly died on December 9, but then his death wasn’t publicly announced until next year.

gentlemand

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It's a publicly known 'flaw' and there are plenty of ways to counter it. The capacity to lose it all exists. The capacity to completely nullify that possibility does too. And since our pal Gerald publicly stated in 2015 he was full multisig that tells us plenty about all this.

livingfree

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Quote from: Zadicar on March 17, 2019, 07:59:15 AM

Quote from: livingfree on March 16, 2019, 03:31:58 PM

The biggest flaw of crypto? I don't think so, it only shows that keeping your funds through an exchange is a very bad idea. The article maker is just creating a buzz to get the attention of the people and react with what he have made. We all knew it that this isn't the very flaw of crypto and likewise, everyone is thinking that it's just an exit scam unless proven we can claim and tell that it is. But it's not really a big flaw for crypto when someone dies together with his private key.

The issue is, he didnt die together with the private keys but rather its already being planned on the very first place.If you do try to look at on its investigation
and followed it then you would definitely say different one.This isnt the biggest flaw of crypto but rather a normal circumstance to happen for those centralized exchange would
possibly do.On most exchanges we dont really able to possess the keys and its really fully contrary on why crypto is being created.

I do follow the case but not that close enough like what you are doing. I also believe that this isn't even a flaw for the crypto. I'm now having that idea with what you have said that this is planned for the very first place and it's more of an exit scam.

Zadicar

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Quote from: livingfree on March 16, 2019, 03:31:58 PM

The biggest flaw of crypto? I don't think so, it only shows that keeping your funds through an exchange is a very bad idea. The article maker is just creating a buzz to get the attention of the people and react with what he have made. We all knew it that this isn't the very flaw of crypto and likewise, everyone is thinking that it's just an exit scam unless proven we can claim and tell that it is. But it's not really a big flaw for crypto when someone dies together with his private key.

The issue is, he didnt die together with the private keys but rather its already being planned on the very first place.If you do try to look at on its investigation
and followed it then you would definitely say different one.This isnt the biggest flaw of crypto but rather a normal circumstance to happen for those centralized exchange would
possibly do.On most exchanges we dont really able to possess the keys and its really fully contrary on why crypto is being created.

livingfree

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The biggest flaw of crypto? I don't think so, it only shows that keeping your funds through an exchange is a very bad idea. The article maker is just creating a buzz to get the attention of the people and react with what he have made. We all knew it that this isn't the very flaw of crypto and likewise, everyone is thinking that it's just an exit scam unless proven we can claim and tell that it is. But it's not really a big flaw for crypto when someone dies together with his private key.

buwaytress

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Nice. One of the strengths of crypto suddenly becomes its flaw. Good to see people responding know this. Bad to see people still don't get the point.

You're supposed to be keeping control of your own private leys when using crypto. Storing it at an exchange exposes a big flaw of a centralised monetary system. Giving someone else control over yr money is exactly against the principle of self determination.

And yeah. Old news. Updates suggest that it's not even what may really be happening with quadriga funds.

Lanatsa

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Quote from: cybersofts on March 14, 2019, 03:07:04 PM

Quote from: o_e_l_e_o on March 14, 2019, 02:57:56 PM

Quote from: cybersofts on March 14, 2019, 01:09:49 PM

The only person who knew the passwords to unlock their funds is dead.

First of all, this is weeks old news. Secondly, it is no longer accurate. Cotten hasn't taken the passwords to his grave, because it is unlikely he is dead and there are no funds in the wallets anyway.

They managed to break in to Cotten's laptop, and discovered that Quadriga's cold wallets were all emptied months before his alleged death. Fake accounts with fake funds were create on the Quadriga exchange to buy real users' bitcoin, and that bitcoin was transferred out to these cold wallets, and later transferred to other exchanges to be sold. This was a massive money laundering scheme and/or exit scam.

Third parties being unable to access funds without knowing the private key/seed phrase/passwords isn't a flaw - it's a security measure (and a very attractive on at that). Crypto's biggest flaw continues to be users trusting third parties to look after their coins for them.

Oh my, exit scams everywhere. we should always stick with the top exchanges to avoid getting scammed by these perpetrators.

Using top exchangers wont even give that kind of guarantees and just take a look on what happened before on big exchangers thats being hacked
or do experience problem?It do cost millions of funds lost and no wonder with all exchangers as well.

This is already an old news and investigation is still on the process but with all the recent evidences or scenarios we can really say that this is an exit scam.

magneto

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Quote

The death of an exchange’s founder exposes cryptocurrencies’ biggest flaw

How is this a flaw, at all? Bitcoin and other decentralised currencies' utility is literally derived in part from the fact that people have complete sovereignty over their funds.

Unlike banks, you don't need to worry about a third party that may block your account, or freeze the funds in them, because only you hold the private keys in bitcoin. There is no other way of accessing your wealth or tampering with it. This is what preserves the fungibility of currency as well.

The fact is that the reason why people lost money through this incident isn't because bitcoins can't be recovered, it is because they trusted a third party to hold their bitcoins in custody, who they probably have no personal knowledge of, who was completely irresponsible with the funds with no backup. That's the reason why third party exchanges and wallets should always be taken with a grain of salt.

Kakmakr

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This is not the norm for all exchanges and the QuadrigaCX exchange was very small compared to other Bitcoin exchanges. This is also not a flaw in Bitcoin, but rather a flaw in the centralized services that are used by people to convert/trade bitcoins into fiat currencies.

In a perfect world, we will not have any Bitcoin exchanges, because people will be paid in Bitcoin and they will never have to convert to fiat. Also, after this lapse in judgement, other exchanges learnt from QuadrigaCX mistakes and they implement measures to prevent such a scenario in the future. Wink

J. Cooper

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Quote from: o_e_l_e_o on March 14, 2019, 02:57:56 PM

Quote from: cybersofts on March 14, 2019, 01:09:49 PM

The only person who knew the passwords to unlock their funds is dead.

First of all, this is weeks old news. Secondly, it is no longer accurate. Cotten hasn't taken the passwords to his grave, because it is unlikely he is dead and there are no funds in the wallets anyway.

It sounds extremely unlikely and terribly irresponsible for an exchange to leave all the funds to a single individual for obvious reasons.

Quote from: o_e_l_e_o on March 14, 2019, 02:57:56 PM

They managed to break in to Cotten's laptop, and discovered that Quadriga's cold wallets were all emptied months before his alleged death. Fake accounts with fake funds were create on the Quadriga exchange to buy real users' bitcoin, and that bitcoin was transferred out to these cold wallets, and later transferred to other exchanges to be sold. This was a massive money laundering scheme and/or exit scam.

Honestly, even without these new developments, it was pretty clear that we've got an exit-scam on our hands here. I'm not buying the owner-died-and-took-the-keys-with-him in a thousand years. The fact that he 'supposedly' died in India makes it even fishier because he could've very well paid a very big sum for a fake death certificate and gotten away with it. The more I am thinking about it the more everything starts to fall in place. He (and possibly people around him) carefully planned this scam.

Quote from: o_e_l_e_o on March 14, 2019, 02:57:56 PM

Third parties being unable to access funds without knowing the private key/seed phrase/passwords isn't a flaw - it's a security measure (and a very attractive on at that).

It really isn't. With the ability to transact freely and in a (pseudo) anonymous fashion comes great responsibility. If you are too lazy to take a couple of security measures and give in on convenience (in exchange for your freedom and excessive service fees), the jokes on you.

Quote from: o_e_l_e_o on March 14, 2019, 02:57:56 PM

Crypto's biggest flaw continues to be users trusting third parties to look after their coins for them.

As of right now, it is, arguably, the biggest problem in crypto. As the infrastructure, that allows secure peer-to-peer transactions, starts to become available (and it will) this problem will fade very quickly. But until then, stay alert and remember folks: "Not your keys, not your coins."

Lucius

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Quote from: o_e_l_e_o on March 14, 2019, 02:57:56 PM

Crypto's biggest flaw continues to be users trusting third parties to look after their coins for them.

I wonder just how many of those who used that exchange use it as storage, and how many just for trading. Unfortunately, these others did not have luck either, they just trade in bad time, and their coins are now spend on luxurious life of few smart people. Users just do not understand that crypto exchanges are not banks, although it is about cryptocurrency, but it is much easier to make such scam with crypto and just disappear.

Quote from: cybersofts on March 14, 2019, 03:07:04 PM

Oh my, exit scams everywhere. we should always stick with the top exchanges to avoid getting scammed by these perpetrators.

Even top currency exchanges do not guarantee complete security, and we should never trust to any of them in the sense that we use it as a bank. Although it is not easy to constantly transfer coins from personal wallet to exchange and back, especially for daily traders, everyone should be prepared to lose coins which are located on exchange.

cybersofts

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Quote from: o_e_l_e_o on March 14, 2019, 02:57:56 PM

Quote from: cybersofts on March 14, 2019, 01:09:49 PM

The only person who knew the passwords to unlock their funds is dead.

First of all, this is weeks old news. Secondly, it is no longer accurate. Cotten hasn't taken the passwords to his grave, because it is unlikely he is dead and there are no funds in the wallets anyway.

They managed to break in to Cotten's laptop, and discovered that Quadriga's cold wallets were all emptied months before his alleged death. Fake accounts with fake funds were create on the Quadriga exchange to buy real users' bitcoin, and that bitcoin was transferred out to these cold wallets, and later transferred to other exchanges to be sold. This was a massive money laundering scheme and/or exit scam.

Third parties being unable to access funds without knowing the private key/seed phrase/passwords isn't a flaw - it's a security measure (and a very attractive on at that). Crypto's biggest flaw continues to be users trusting third parties to look after their coins for them.

Oh my, exit scams everywhere. we should always stick with the top exchanges to avoid getting scammed by these perpetrators.

o_e_l_e_o

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Quote from: cybersofts on March 14, 2019, 01:09:49 PM

The only person who knew the passwords to unlock their funds is dead.

First of all, this is weeks old news. Secondly, it is no longer accurate. Cotten hasn't taken the passwords to his grave, because it is unlikely he is dead and there are no funds in the wallets anyway.

They managed to break in to Cotten's laptop, and discovered that Quadriga's cold wallets were all emptied months before his alleged death. Fake accounts with fake funds were create on the Quadriga exchange to buy real users' bitcoin, and that bitcoin was transferred out to these cold wallets, and later transferred to other exchanges to be sold. This was a massive money laundering scheme and/or exit scam.

Third parties being unable to access funds without knowing the private key/seed phrase/passwords isn't a flaw - it's a security measure (and a very attractive on at that). Crypto's biggest flaw continues to be users trusting third parties to look after their coins for them.

cybersofts

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The death of an exchange’s founder exposes cryptocurrencies’ biggest flaw

Supposedly, you can’t take anything with you when you die. Unfortunately though, for customers of QuadrigaCX, a Canadian cryptocurrency exchange, that’s not quite true. Sometimes, you can die with a priceless secret in tow.

When Gerald Cotten, Quadriga’s 30-year-old CEO, unexpectedly died from complications of Crohn’s disease this December, he took with him the passwords to unlock more than $140 million of cryptocurrency. Now, the exchange’s users are left in a bind.

The only person who knew the passwords to unlock their funds is dead. And because of the nature of cryptocurrencies, there’s virtually no way to recover the funds. Unless Cotten left an undiscovered trove of logins, his very-much-alive customers are permanently a lot poorer. (Unless, of course you’re among those speculating that Cotten’s death was an elaborate ruse, and he disappeared with the money.)

Reference: https://qz.com/1572000/quadrigas-founders-death-exposes-a-huge-flaw-in-cryptocurrency/?utm_source=facebook&utm_medium=qz-organic

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