Gerald Cotton, founder of Canadian cryptocurrency QuadrigaCX died in late December during a philanthropic trip to India. Investors, family members and accountants are unable to locate Cotton’s password or encryption key. QuadrigaCX’s platform was frozen on January 26, but assets are still unavailable to investors and there is concern that some of the crypto held in cold storage will remain unavailable or is lost entirely. The Canadian Imperial Bank of Commerce has frozen $28 million of funds because it is not clear who owns those assets. According to The Guardian, QuadrigaCX has filed for creditor protection in Nova Scotia and the company has hired Ernst and Young, the accounting firm, to act as a monitor.
Cotton’s death is the most recent example of inconsistencies within the crypto industry. Without regulation it is difficult to determine if and when investments can be accessed. Though blockchain is moving forward in various industries like healthcare and finance because of its encryption and digital record-keeping capacities the consumer side of cryptocurrency seems to be losing ground. At the Paris Fintech Forum, attendees no longer flock to crypto forums. Bankers, CFOs and others are interested in supply chain, branchless lending and traditional banking.
Cryptocurrency is slowly but surely feeling the realities of the physical world. Without easy liquidity, or a contingency plan in the event of untimely death and locked assets, crypto could remain viable only in the realm of its loyal users. In a sense, the currency has returned to the place where it began: an alternate currency that holds its value in digital spaces beyond and between regulatory guidelines and traditional banking.
The blockchain-backed digital currency was on the upswing one year ago but after volatile price swings, security concerns and new currencies flooding the space, investors are taking another look at more traditional banking. At the Paris Fintech Forum, Benedetta Arese Lucini told an audience, “Our adolescence is over.”
