The Importance of Passwords: How Not to Lose $190 million
Every bank account, email account and social media account seems to have a different criteria for establishing a secure password. Remembering all of them is difficult and sometimes seems impossible. However, cyber security is one issue that should not be taken lightly as evidenced by the frequent reports of banks, retail companies and even the credit reporting agencies themselves being hacked.
With that said, what happens if you die and no one knows your passwords or how to find them? While hackers gaining access to your accounts is never a good thing, neither is having accounts locked securely away with no ability for your family to access them following your death. Recently, we found out what happens in a worst-case scenario when passwords are reportedly lost forever.
In December of 2018, Gerald Cotton, the 30-year-old founder of a Canadian cryptocurrency exchange (QuadrigaCX), died suddenly and took the whereabouts of some $190 million in cryptocurrency (i.e. Bitcoin and others) to his grave. When Cotten died, he alone knew a vital piece of information — the password to access the customers’ digital currency, which is reportedly being held in cold storage. Now, tens of thousands of QuadrigaCX users are wondering if they will ever see their funds again.
“Cold storage” is where a holder of crypto assets — in this case, QuadrigaCX — keeps the cryptocurrency offline, or not on a computer or server. While cold storage mitigates the risk of a hack, access often requires passwords and encrypted codes for the devices that are holding the cryptocurrency.
Cotton’s widow, Jennifer Robertson, says she was not involved in QuadrigaCX until her husband died suddenly in India from complications related to Crohn’s disease. She says she has searched the couple’s home and other properties for business records related to QuadrigaCX, to no avail. The laptop on which he conducted all the business is encrypted and she is adamant that she does not have the password or recovery key.
Despite Ms. Robertson’s claims, many are suspicious of the story and doubt claims that Cotten had the only key to reserves valued at almost $200 million. Some have even wondered whether Cotten faked his own death and that this is all part of an “exit scam” to abscond with these funds.
Not surprisingly, the Canadian court system is now involved and appointed Ernst & Young as the court-appointed auditor. QuadrigaCX was believed to be Canada’s largest cryptocurrency exchange, but following the death of Cotten, Ernst & Young says its cold storage wallets are empty. QuadrigaCX is likely facing bankruptcy and it is unclear if this cryptocurrency will ever be found. Whether or not you own cryptocurrency, it is vital that you keep a record of your most important online accounts and their passwords. Moreover, it is equally as important that someone you trust knows how to find this information should the need ever arise.
When working with our clients, we advise them to keep a record of their accounts, their passwords and also let someone know where this information is safely stored i.e. in a safe or safety deposit box. Do not leave your love ones in a position where they are scrambling to put together the pieces of vital information after your death. Contact our office to discuss how to implement a business succession and estate plan that combines security and access to your online accounts in the event of your untimely demise.
