Good As Gone
The recent death of the CEO of QuadrigaCX, a major cryptocurrency exchange in Canada, demonstrates a basic, yet often-overlooked,
In the event of your incapacity or death, if your heirs don’t know how to find or access your assets, those assets are as good as gone. Indeed, it’s as if those assets never existed at all.
While it might not be that big of a deal if the assets in question aren’t worth much money, in the case of QuadrigaCX’s owner Gerald Cotten, the lost assets were purportedly worth $145 million, representing the vast majority of the company’s crypto holdings.
The hefty sum effectively vanished after Cotten died without leaving instructions for how to access the digital currency’s security passcodes. The crypto holdings were owned by some 115,000 clients, who used the exchange to buy and store their digital coins.
An untimely death and a cold wallet
According to an affidavit filed in a Canadian court, Cotten, age 30, died a sudden and untimely death from complications related to Crohn’s disease while traveling in India during December 2018. In January 2019, QuardigaCX filed for bankruptcy to protect itself from creditors, including all of the customers with crypto stored in the company’s electronic vault.
Ironically, the digital assets were lost in part because Cotten followed a security practice designed to safeguard the funds. Most of the company’s cryptocurrency holdings were stored in a “cold wallet,” or one that isn’t connected to the Internet. The use of a cold wallet is a common practice, since “hot wallets,” or those connected to the internet, are a frequent target of hackers.
This typically would’ve been a prudent measure, but Cotten reportedly stored the cold wallet on an encrypted laptop that only he knew how to get into.
According to Cotten’s widow, Jennifer Roberston, following multiple searches, she has been unable to find the passwords that will open the laptop and provide access to the company’s cold wallet. QuadrigaCX even brought in IT experts to get into Cotten’s laptop, but so far, all attempts have been unsuccessful.
Canadian financial authorities and independent auditors are currently investigating the case, with some even speculating that Cotten’s death was faked as part of a nefarious scheme connected to QuadrigaCX. Whether it ultimately turns out to be a simple case of carelessness or something more malicious, the lesson remains the same:
From cryptocurrency to safety deposit boxes and everything in between, your family must know how to find and access every asset you own,
In fact, there’s a total of more than $58 billion of unclaimed assets from across the country held by the State Department of Unclaimed Property. Much of that massive sum got there because someone died and their family didn’t know they owned the asset.
Incomplete estate planning
Another puzzling fact is that upon first glance, Cotten was diligent in his estate planning. Indeed, Cotten named Roberston as his estate’s executor and left her instructions for the complete distribution of his assets, including a private jet and multiple properties in Canada.
He even left behind $100,000 for the care of his two dogs—yet he managed to forget to include the passcodes that would unlock his company’s vast crypto assets. We believe that most people holding crypto assets haven’t taken the proper steps to ensure their heirs will know how to access these assets upon their incapacity or death.
Given this, if you own any digital currency like Bitcoin, be sure to call us to make certain these assets have been correctly included in your estate plan. Indeed, if you have any assets that might potentially be overlooked in the event of your incapacity or death, contact us now.
Leave detailed instructions
What makes this loss so tragic is that it could have been so easily avoided. Whether your estate is valued in millions or thousands, your plan must include a comprehensive inventory all of your assets. And as Cotten’s case shows, this inventory must also include
As your Personal Family Lawyer®, a comprehensive asset inventory like this is a standard part of every estate plan we create. And whether it’s cryptocurrency, social media accounts, or online payment platforms like PayPal, this inventory will include detailed instructions for accessing all of your digital assets and their passcodes. Contact us today to get started with a Family Wealth Planning Session.
This article is a service of Susan L. Hunt, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.