A Canadian cryptocurrency exchange has lost access to its cold storage. This news was confirmed by its board of directors.
February 01, 2019 | AtoZ Markets – Crypto exchange QuadrigaCX, based in Canada, has shocked its client with the news that it has lost access to its cold storage. This unpleasant news has further highlighted the need for users to take responsibility for the secure storage of their digital assets. Leaving one’s digital assets with an exchange for a long time is proving to be more risky by the day as many of these companies are often faced with cyber attacks. Especially for a relatively small and new exchange like QuadrigaCX, which is still small in terms of daily users, it’s a big risk.
Shocking: Crypto Exchange Lost Access To Its Cold Storage
In a post written by the firm’s board of directors, the exchange has been having issues with liquidity which has caused significant financial challenges. The post added that the attempts to locate and secure ”our very significant cryptocurrency reserves held in cold wallet…… have not been successful”. So a cryptocurrency exchange cannot access its own cold storage. This is shocking to say the least.
The Supreme Court will set up an independent third party, Ernst & Young Inc, to look after creditors’ protection. The troubled firm will update its users on Tuesday 5th February.
Should You Store Your Digital Assets With An Exchange?
The extent of the potential damage if the storage access is not recovered is not very huge. The exchange only boasts of less than $500,000 trading volume over the last 24 hours of trading before it got into the trouble. The amount of users’ funds that are not involved in active trading is not available yet.. This blunder should serve as an eye-opener to crypto traders or users of crypto exchanges, of the need to have alternative ways to store their digital assets. Only funds that are being committed to actual trading or exchange should be within the care of crypto exchanges.
This unfortunate Quadriga blunder is one but over the years, most exchanges have been a victim of one cyber attack or the other. The most recent examples include Coinrail and Zaif. Aside cyber attacks, some of these firms, especially the unknown ones are notorious for poor management of users’ funds. It’s true that there are very limited choices even wallets are found under attacks. Nevertheless, users should avoid keeping their digital assets with exchanges for a long time as this has shown to be one of the riskiest things to do.
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