Someone Failed Cryptocurrency Asset Protection 101
As an asset protection attorney I’m always on the lookout for articles about cryptocurrency.
This one made me catch my breath when I read, “A cryptocurrency exchange in Canada has lost control of at least $137 million of its customers’ assets following the sudden death of its founder, who was the only person known to have access to the offline wallet that stored the digital coins.” I tell my clients constantly that they must have a plan in place in just such an event. You never know what will happen.
This happened to a British Columbia-based company called QuadrigaCX. No one is able to access the accounts of their 100,000+ clients. And apparently another $53 million is inaccessible because it’s tied up in disputes with third parties.
Have a Plan
The absolutely most crucial first order of business when you have cryptocurrencies is to have a recovery plan. Whether you use a hot wallet or a cold wallet, someone besides the owner of the account must know how to gain access.
The death of the QuadrigaCX owner was quite mysterious. He was 30 years old. And to make matters even more complicated, he was in India. It still remains to be seen whether or not anyone will be able to hack into his encrypted offline wallet. Experts have been trying diligently since the young man’s death in December.
Recovery Plans Prevent Fraud
A strong, well-thought-out recovery plan can help to prevent opportunistic fraud and asset transfer mistakes by providing clear guidance during atypical events. Coin recovery should be just one part of your overall strategic operations and recovery plan. Even if you don’t own a company, if you have any assets in cryptocurrency you need an asset protection plan that includes a recovery plan. And you need to put it in place now.