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Ernst & Young Locates $400K Of The $200M Missing QuadrigaCx Fund

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$400k of missing QuadrigaCx fund found

The most infamous saga that shocked the crypto world continued when the government-appointed monitor for Quadriga CX, Ernst & Young said that they were already able to locate $400,000 worth company assets. The monitor also suggests that at this point, the best course of action for Quadriga is to file for bankruptcy.

The highly covered story of the predicament faced by Quadriga started when the chief executive officer, Gerard Cotten, died in December under mysterious circumstances in India. The CEO had left his company with nothing after he was unable to surrender the passwords and encryptions keys, as well as other digital assets of the company before he died.

Cotten left his company with a $200 million debt from 115,000 users of the crypto exchange company. The online startup that handles cryptocurrencies of thousands of its clients cannot retrieve $145 million worth of digital money in Bitcoin, Litecoin, Ether, and other digital tokens. The company also said that the Vancouver-based Quadriga CX could not pay C$ 70 million it owes. Quadriga CX’s directors posted a notice on the firm’s website on Jan. 31 that it was asking the Nova Scotia court for creditor protection while they address “significant financial issues” affecting their ability to serve customers.

In the latest twist in the infamous story, evidence subsequently revealed that the company faced financial difficulty before Cotten’s death and that most of the money simply doesn’t exist. Recent reports confirmed this speculation but also said that monitoring company found $400,000 worth of the company’s assets.

Ernst & Young argues that the most viable option for QuadrigaCx is to file for bankruptcy. Bankruptcy would allow the company’s asset to be sold to recover some of its lost funds. Furthermore, the monitoring company discovered that payment processors and other businesses that had been in contact with the company may have company assets in them and that they could be recoverable.

POSConnect, a payment processing company, confirmed that it owes Quadriga $300,000, but said that the money would not be accessible until April 28, 2019. Similarly, VoPay, a money transfer company, is believed to possess $116,000 of the missing Quadriga funds. However, the report also revealed that VoPay would not make the money available unless it’s granted indemnity from liability, which E&Y is unwilling to do.

A Swiss bank named WB21 used to hold Quadriga’s money in 2017 and now, the bank said that it could not establish who the money belonged to. Reports believed that WB21 has $9 million of the missing Quadriga funds. However, the company said that Quadriga only owns $14.

“WB21 has been uncooperative with each of the requests of the monitor and has not provided even basic information,” the report said.

E&Y has already requested legal support from the courts to pressure WB21 to give them access to their documents.

A special committee is helping victims recover their lost money

A new steering committee has been appointed by Canadian law firms Miller Thomson and Cox & Palmer to guide the unfortunate customers of the failed cryptocurrency exchange company, QuadrigaCX, in their legal battles to recover their investments and cryptocurrency balance from the crypto exchange. The committee will potentially represent around 115,000 customers.

The Canadian law firms filed a court notice on March 19. Miller Thomson announced that it had selected its Official Committee of Affected Users. The committee that covers QuadrigaCX’s former customers who are affected by its financial problem will guide the law firm’s work as Quadriga and its court-appointed monitor, Ernst & Young (EY), try to recover the exchange’s multi-million dollar funds that were missing following the mysterious death of Quadriga’s CEO last December.

The online startup that handles cryptocurrencies of thousands of its clients cannot retrieve $145 million worth of digital money in Bitcoin, Litecoin, Ether, and other digital tokens. The company also said that the Vancouver-based QuadrigaCX could not pay C$ 70 million it owes.

QuadrigaCX’s directors posted a notice on the firm’s website on Jan. 31 that it was asking the Nova Scotia court for creditor protection while they address “significant financial issues” affecting their ability to serve customers.

The quandary has also involved the FBI, and the RCMP as the two law enforcement agencies from the USA and Canada have launched their joint investigation on what happened with Quadriga’s funds. With all the twists and turns of the story of QuadrigaCx and its missing funds, the world is reminded of the dangers of unregulated economic systems and the horrors of corporate bureaucracy.

A consumer tech and cybersecurity journalist who does content marketing while daydreaming about having unlimited coffee for life and getting a pet llama.

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Cryptocurreny

Are Hackers Friends Of Crypto Industry Or Are They Enemies?

Hackers have been paid more than $30,000 for exposing and fixing security issues in crypto companies but at the same time, hackers are also the reason why some of them lose money. Click To Tweet

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Hackers have been paid more than $30,000 for exposing and fixing security issues in crypto companies but at the same time, hackers are also the reason why some of them lose money.
Hackers have been paid by crypto companies to fix bugs. Photo: Christoph Scholz | Flickr | CC BY-SA 2.0

The unregulated universe of cryptocurrencies have found its unlikely allies among hackers in solving systemic problems and fixing bugs, a report reveals.

Crypto companies including crypto exchanges have paid a lump sum of at least $32,150 to different white-hat hackers by fixing the security flaws in popular crypto and blockchain platforms such as TRON, Brave, EOS, and Coinbase.

The data revealed that 15 blockchain and crypto-related firms had made hefty payments as rewards to security researchers between March 28 and May 16. The said rewards were made concerning 30 publicly-released bug reports during the entire duration.

Among all the companies who had the security threats, Omise, the software firm behind cryptocurrency OmiseGo, need the most fixes with six disclosed bugs and security issues. Blockchain-powered prediction market Augur disclosed three reports, as did Brave Software, makers of the Brave browser, which features its own native token.

Crypto and blockchain technology has since been criticized by different financial institutions for being volatile and vulnerable to technology and cyber crimes, making the technology not conducive to become a working technology. It only makes sense that in time when they need help the most, white-hat hackers and security researchers are there to help them – for a price.

According to the study, he payment varies depending on the severity of the bug. They adjust their HackerOne rewards depending on how easy or difficult it is for the white-hat hacker to reolve a security issue. For instance, majority of Omise’s disclosed security flaws were only worth around $100 each, there are other payments that amounted to a lot more, the study suggests.

Both Block.one, the company that owns the EOS “blockchain,” and budding network Aeternity paid one hacker with more than $10,000 for a single issue that the hacker paid. TRON also paid $3,100 to the researcher who realized the network was susceptible to being flooded with malicious smart contracts, something thatcould jeopardize the future of the company.

Most of cryptocurrency companies and blockchain firms, just like other tech-based companies, have set up a reward or bounty system that would pay anyone that can point out any form of security issue in their systems; a bigger reward is also provided to those who can fix them.

While hackers who decided to use their skills to improve the technology stratosphere are increasing in number steadily, they could at any time decide to use their skills to exploit the vulnerabilities they have discovered for bigger take home money.

Just like how last week, cryptocurrency exchange Binance announced that hackers had successfully stolen 7,000 BT (then $40 million, now $55 million) from its own wallets.

Similarly crypto exchange company Cryptopia announced last week that the company is going into liquidation following the attack that lost the company millions of dollars worth of crypto money in January.

According to a blockchain data analytics firm, their investigation allowed them to estimate the loss caused by the cyber attack to be as much as $16 million in ether and ERC-20 tokens. While the company has restarted their trading services in March, no one is still certain of the actual damages that the cyber attacked caused the company. Until now, the company is still recovering from the aftermath of the breach and still having banking issues.

According to the liquidation firm, Grant Thornton, since the damages caused by the hacking was too “severe” and has impacted the company massively in terms of trade, and amidst the effort of its management to regain composure by reducing costs and returning the business to profitability, they have decided that liquidation is the best option for the company and all stakeholders moving forward.

It is still unclear whether or not Cryptopia is running its own bounty program but coincidentally, Binance has a bounty reward of $100,000 for anyone who can solve the mystery of their stolen crypto money, but until now, the perpetrator is still at large and unidentified.

“At Binance, the security of our users is our number one priority. As such, we strive to provide the most secure platform possible. We will evaluate reported security issues based on the security impact to our users and the Binance ecosystem.”

In the end, the question still remains: Are hackers friends of the crypto industry or are they the enemy?

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Cryptocurreny

Facebook Opens A Swiss Company To Develop Own Virtual Currency, Report Suggests

Facebook may have its own currency soon but no confirmation has been made yet. Reports revealed that Facebook opened a Swiss company to focus on developing its own cryptocurrency. Click To Tweet

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Reports revealed that Facebook opened a Swiss company to focus on developing its own cryptocurrency.
Facebook may have its own currency soon but no confirmation has been made yet. Photo: Esther Vargas | Flickr | CC BY-SA 2.0

There is no denying that cryptocurrency is slowly becoming the most used currency in the world. The future is bright for virtual money as people started to become a lot more dependent on the internet on almost all aspects of their daily lives. And when a technology thrives, Facebook does not falter to offer the same thing. Reports suggest that Facebook has set up a company overseas to develop its virtual currency that users can send to their friends and contacts.

The social networking giant reportedly opened up a company in Switzerland to focus on payment and blockchain technology, similar to the technology that powers bitcoins and other cryptocurrencies.

According to a Swiss publication, Handelszeitung, the Facebook cryptocurrency would be tied to the US dollar and therefore will remain stable unlike bitcoin, which started crashing since 2017.

The report also revealed that Facebook has already set up a company called Libra Networks in Geneva several weeks ago. They noted that Libra is the tech giant’s internal project name for Facebook money.

Owned by Facebook Global Holding II in Ireland, the Swiss company will focus on developing the software and hardware for crypto-related functions like payments, blockchain, analytics, big data, and identity management.

Facebook is hesitant to comment regarding their plans for the digital currency and did not confirm nor denied the reports of its existence. Nonetheless, the news is consistent with an earlier report that Facebook created a team of 50 individuals to develop their cryptocurrency and blockchain technology to be used across the network and on its WhatsApp messaging services.

That design would be geared toward avoiding a speculative frenzy like the one that caused the value of the primary cryptocurrency, bitcoin, to soar and then crash. While Facebook also did not confirm anything related to the leaked project at the time, the California-based company confirmed that they are interested in blockchain technology.

“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” the company said in a statement. “This new small team is exploring many different applications.”

Blockchain technology serves as the virtual ledger for every transaction using a cryptocurrency like bitcoin, and it builds up a set of data blocks recording transactions and who made them.

Meanwhile, existing crypto companies still face a huge problem in the banking system, and Facebook may face a similar obstacle in case the reports on its own crypto money turns out to be true. Earlier reports suggest that crypto companies around the world are having trouble in opening bank accounts for their operations.

The report followed the complaint filed by Sam Bankman-Fried, Chief Executive Officer of the quantitative crypto company, Alameda Research that “the standard answer of ‘just go to your local Chase branch’ doesn’t work in crypto.” Bankman-Fried also added that it is not illegal for banks to serve crypto businesses, but “it’s a massive compliance headache that they don’t want to put the resources in to solve.’’

The report pointed out that while larger banks avoid getting into a transaction with crypto and blockchain corporations, smaller banks are getting hold of the unserved market.

Silver Bank in San Diego said in its November 2018 filing for an initial offering that cryptocurrencies companies have a total of $40 billion to deposit and larger banks are letting go of it.

Blockchain investment, trading, and advisory firm NKB group have also struggled with establishing banking relationships with a lot of major banks. According to NKB Group’s head of Brokerage Ben Sebley, “denying basic banking is madness, impedes sector growth and forces companies to get creative to solve the problem […] The banks are being overly prudent.”

The facilitation of cryptocurrency in banking has been an ongoing debate after major banking giants like JPM, and other American banks have banned the purchase of cryptocurrency using their debit and credit cards. However, supporters have argued that this ban is a step back for the banking industry.

“If they are policing digital currency transactions by de-risking the activity on the basis of protecting customers from market changes, they are going to be on the hook for market changes where their financial products are used where they did not intervene and de-risk to protect consumers,” said attorney Christine Duhaime, founder of the Digital Finance Institute.

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Cryptocurreny

Hacked Crypto Exchange ‘Cryptopia’ Is Selling Their Assets

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The hacked company is going into liquidation.

The barely regulated world of cryptocurrencies has undeniably has its risks, and people are only realizing it when their crypto deals go sour or when the crypto exchange becomes bankrupt. The lesson was learned the hard way by the user of the hacked crypto exchange company Cryptopia when the company announced this week that they are selling their assets for them to recover from the significant loss they experience after their system was attacked earlier this year.

The news was announced Wednesday by the company’s assigned liquidator, professional services firm Grant Thornton New Zealand. The company confirmed the news through a post on their Twitter account as well as on its website.

The announcement follows the unexpected shutting down of Cryptopia’s website on Tuesday for being “under maintenance” without any warning to their users or the public on its social media accounts. A Redditor noticed the downtime in the company ‘s website and asked whether hackers once again targeted them.

The unfortunate incident started when Cryptopia went offline on January without any warning only to notify the public after a few weeks saying that the exchange had “suffered a security breach which resulted in significant losses.”

According to a blockchain data analytics firm, their investigation allowed them to estimate the loss caused by the cyber attack to be as much as $16 million in ether and ERC-20 tokens. While the company has restarted their trading services in March, no one is still certain of the actual damages that the cyber attacked caused the company. Until now, the company is still recovering from the aftermath of the breach and still having banking issues.

According to the liquidation firm, Grant Thornton, since the damages caused by the hacking was too “severe” and has impacted the company massively in terms of trade, and amidst the effort of its management to regain composure by reducing costs and returning the business to profitability, they have decided that liquidation is the best option for the company and all stakeholders moving forward.

David Ruscoe and Russell Moore from Grant Thornton will help Cryptopia secure its assets “for the benefit of all stakeholders,” according to today’s announcement.

“While this process and investigations take place, trading on the exchange is suspended,” Grant Thornton said, adding that the complex investigation will take “months rather than weeks.”

Understandably, Cryptopia’s customers have expressed frustration over the fact that they were still not able to withdraw from their accounts since the hacking occurred. Some of them are even calling for creditors to organize and take legal actions against Cryptopia.

As a response, Ruscoe promised that his firm would conduct an investigation and do their best to come up with the best solution for all stakeholders.

“We realize Cryptopia’s customers will want to have this matter resolved as soon as possible. We will conduct a thorough investigation, working with several different stakeholders, including management and shareholders, to find the solution that is in the best interests of customers and stakeholders.”

What happened to Cryptopia is only one of many instances that highlighted the critical sentiments against cryptocurrency. Another crypto exchange company, Quadriga CX, has been in hot water in the past few months when the company could not pay $200 million – worth of funds to their customers following the death of their Chief Executive Officer.

CEO Gerard Cotten died last December and brought with him all the digital assets of the company including passwords and encryption keys of the cold and hot storages where the funds were supposedly kept for safety. However, the investigation by the monitor appointed by the court, Ernst & Young, revealed that the company owes more money than it owns.

The report reveals that Quadriga CX only has $20 million plus in assets while it owes more than $200 million. While the company maintains that there are more assets in cold storages or offline “wallets,” EY was still not able to verify the claim except when some of the Quadriga funds were questionably transferred from one hot wallet to several addresses.

Until now, the company is still trying to figure out how to repay 115,000 of their customers, and they are currently in the brink of bankruptcy.

Meanwhile, Grant Thorton is expected to file an initial report on the case next week on the New Zealand Companies Office website.

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