Ideally, when the founder of a business passes there should be a plan in place to handle their financial assets and to allow the business to continue operating smoothly if possible. This is done to ensure a smooth transition takes place during such a trying time for those within the company, as well as for the founder’s family members. Unfortunately for those working with the digital-asset exchange Quadriga CX, this wasn’t the case.
Online startup Quadriga CX recently ran into a major issue when its CEO, Gerald Cotten died on December 9, 2018 in India due to complications from a battle with Crohn’s disease.
The problems began when the company realized it couldn’t retrieve the C$190 million ($145 million) in Bitcoin, Litecoin, Ether, and other digital currencies it had been holding for its clients. Quadriga CX uses a digital application to store the keys to send and receive cryptocurrencies; and, it appears to have been lost with Cotten’s passing.
Cotten, being overly security conscious, utilized encryption throughout his company’s laptops, email, and direct messaging needed to run the five-year-old business. According to an affidavit from Jennifer Robertson, his widow, Cotten had taken sole responsibility for the handling of funds and digital coins, the banking and accounting of the business, and moved the majority of the digital coins into cold storage. All of his efforts were undertaken in order to avoid the potential of being hacked.
While Cotten’s security measures are understandable due to the five major attacks on virtual currency exchanges that occurred just last year, Robertson has yet to find any of his passwords or business records for the company. Experts brought in to attempt to hack into Cotton’s computers and mobile phone only had, “limited success.”
“After Gerry’s death, Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost,” Robertson said, adding that the company’s access to currency has been “severely compromised.” The firm has been unable to negotiate bank drafts provided by different payment processors.
The Importance of Proper Estate Planning
If you happen to own a business, it’s important that your estate planning efforts begin sooner rather than later. As a business owner it’s incredibly likely that a significant portion of your wealth is tied up in your business. The success of your estate plan is dependent upon the business being transitioned to the next generation or sold for a fair price. Either option can take years of planning and preparation to ensure success.
Houston Estate Planning Attorneys
We advise business owners to take steps to protect their businesses in the event the unfortunate happens. Our attorneys can assist in the planning process and create a plan that makes sense for you and your beneficiaries.
The attorneys at Adair Myers Graves Stevenson take a hands-on approach to the practice of law, personally meeting with clients and working hard to protect their interests and build their future. We are proud to offer the knowledge and legal experience of a large law firm, but with greater accessibility, more reasonable fees, and personalized client service. Contact us today for a free consultation.