MyCrypto CEO: QuadrigaCX May Not Have Ethereum Cold Wallet, Where’s the Missing $150m?

Taylor Monahan, the founder and CEO of MyCrypto, one of the most widely utilized non-custodial wallets in crypto, has said that QuadrigaCX may never have had an Ethereum cold wallet.

Crypto Wallet CEO Raises Questions about QuadrigaCX’s Claims

After evaluating three main Ethereum addresses used by QuadrigaCX, Monahan said that all of the addresses were likely owned by customers, not by the exchange.

“Based o[n] the actions via ShapeShift, I can only assume they were trading the ETH for BTC on Bitfinex/Poloniex as well. Regardless, these were customer funds. All 3 main addresses ultimately receive ALL customer deposits, which were then sent to a variety of exchanges,” she said.

Earlier this month, as CCN extensively reported, Canada’s largest crypto exchange QuadrigaCX lost its access to customer funds worth $190 million in crypto and fiat.

The exchange stated that its CEO, who had sole control of the exchange’s cold wallet private keys, passed away and the firm is no longer able to access the funds as a result.

Experts Skeptical Toward QuadrigaCX Case, Can $150 Million in Crypto be Recovered?

Throughout the past several days, several reports claimed that QuadrigaCX’s cold wallet addresses have been moving funds.

But, most of the addresses turned out to be hot wallets given the size of the transactions initiated by the wallets.

Large exchanges often store the majority of user funds in cold wallets that are stored offline and cannot be targeted by hackers.

Exchanges like Binance and Coinbase are known to have implemented sophisticated systems to safeguard and protect holdings stored in cold wallets.

Before initiating transactions from cold wallets, major exchanges go through weeks to even months of planning to ensure no technical mishap occurs.

The three main addresses of QuadrigaCX evaluated by MyCrypto CEO Taylor Monahan sent many transactions to different wallets including the addresses of Bitfinex and Poloniex.

Considering that cold wallets of exchanges usually deal with millions of dollars in customer funds, the several thousand ETH sent out by the three wallets show they are unlikely to be the cold wallets of QuadrigaCX.

Speaking to CCN, Monahan said she has yet to evaluate the main ETH address of QuadrigaCX that contains more than 500,000 transactions.

But, based on the pattern of the three addresses, it is entirely possible that QuadrigaCX never had an Ethereum cold wallet.

“I’m seeing NO indication of Quadriga ever having cold / reserve wallets for ETH,” Monahan said.

The MyCrypto CEO added:

“Oh, and just in case you weren’t shaking your head enough, don’t forget that Quadriga ran an exchange with KYC. They have a pile of user’s KYC data. They could turn around and open an exchange account with any of that KYC data to move money.”

Red Flags

In previous interviews, as revealed by Cornell Professor Emin Gün Sirer, former QuadrigaCX CEO Gerry Cotten claimed that the exchange employed a multi-signature system to protect user funds.

A multi-signature system allows individuals or businesses to hold private keys to a certain address. Only when the majority of the keys are combined can the individuals or businesses obtain access to the funds stored in the address.

However, the exchange evidently had not employed a multi-signature system in all of its cold wallets because it was reported that the CEO had full control over the funds.

Jesse Powell, the CEO of Kraken, also raised suspicion on the case involving QuadrigaCX given the absurdity of the situation.

“We have thousands of wallet addresses known to belong to QuadrigaCX and are investigating the bizarre and, frankly, unbelievable story of the founder’s death and lost keys. I’m not normally calling for subpoenas but if the Royal Canadian Mounted Police are looking into this, contact Kraken,” he said.

Author: Joseph Young 
Image Credit: Featured Image from Shutterstock

MyCrypto raises $4 million for ‘consumer-friendly gateway’ to cryptocurrency

It’s all Greek to many consumers when it comes to cryptocurrency, but one Los Angeles-area startup aims to change that.

MyCrypto Inc., headquartered in the South Bay city of Redondo Beach, wants to build the first mass consumer-friendly gateway for cryptocurrency users.

Founded last year, the company has raised $4 million in a Series A led by Polychain Capital, a San Francisco-based investor in cryptocurrency protocols and companies.

MyCrypto offers an open-face interface that simplifies the process of storing, sending and receiving digital assets. The company provides a suite of tools for users to create new wallets, send and receive, and buy and sell/exchange virtual currencies.

In a move to make it easier for users to secure their funds outside of an exchange, MyCrypto recently launched a desktop app that will allow users to manage and use their crypto currency without online services and protocols.

“The cryptocurrency market is always changing and evolving, which can make navigating and understanding it difficult and overwhelming for both new and seasoned users,” said MyCrypto founder and CEO Taylor Monahan in a statement. “We’re dedicated to designing an experience that can further simplify how people can access and store cryptocurrency.”

“We believe today one of the major bottlenecks to cryptocurrency adoption is the lack of an easy-to-use interface for average people,” added Polychain founder and CEO Olaf Carlson-Wee. “MyCrypto is led by hardcore cryptocurrency entrepreneurs and is well-positioned to onboard the next 100 million cryptocurrency users.”

Additional investors in MyCrypto’s latest round include Boost VC, ShapeShift, Mainframe founder and CEO Mick Hagen, Chance Du of Coefficient Ventures, Ausum Ventures, early Dropbox employee Albert Ni, and Earn co-founder and CFO Lily Liu. The company also raised an undisclosed seed round.

Monahan, who previously founded MyEtherWallet, discussed her latest venture further via email, including what inspired MyCrypto, what Polychain brings to the table as an investor, and what it will take to achieve widespread adoption of cryptocurrency.

What inspired MyCrypto?

We saw an immense need for easy-to-use solutions that had a lower barrier to entry than available solutions. We want to see the cryptocurrency community grow, and in order to do that the solutions need to be more diverse, simple and frictionless.

What will the company use its Series A funding for?

With this new funding, MyCrypto plans to build the first mass consumer-friendly gateway for cryptocurrency users. We aim to grow our team and improve product while specifically focusing on the user experience.

The blockchain and subsequent products are notoriously complicated and intimidating. We want to change that so anyone — regardless of technical expertise or background — can interact with the blockchain and decentralized applications with confidence.

In addition to funding, what does Polychain Capital bring to the table?

Polychain has immense knowledge and background in the crypto space and, through their expansive portfolio, understands the unique challenges facing crypto-companies as they grow. On top of that, Olaf Carlson-Wee’s previous experience at Coinbase has proven to be especially helpful in helping us build a robust customer support team and ensure our systems and processes are ultra-secure.

What makes MyCrypto’s offering “consumer-friendly”?

We prioritize and advocate for the user above all else and build based on feedback and interactions with our users and the wider community. Because of this we are able to create and iterate based on feedback and build features that people actually want and are actively using.

What will it take for cryptocurrency to become widely used?

A lot of people are waiting for the “killer dapp (decentralized application)” to bring cryptocurrency to the mainstream, but the “killer dapp” can’t be discovered or used by the masses until the core ecosystem infrastructure is built and people can interact with the blockchain without so much effort or risk.

This is why we are so focused on improving the experience of our products and thinking hard about how a new user enters this space and is onboarded. Once the experience of understanding the value of cryptocurrency and successfully obtaining, holding and sending it is frictionless, we will see growth and adoption like we have never seen before.

How many employees does MyCrypto have?

We have just over 20 people on our team, although they are a healthy mix of full-time employees, contractors and consultants. Our team works remotely and is spread all over the globe, and we’re always looking for new people, especially those with diverse backgrounds and experiences.

What is MyCrypto’s business model — how does the company make money?

At the moment monetization comes in the form of affiliates and rev-share programs with our partners like ShapeShift and Coinbase. For example, if a user exchanges coins or tokens or purchases coins with USD, we get a small cut of the transaction fee.

Moving forward, we will be experimenting with more advanced features and smart contracts that will allow us to provide especially useful features to users in return for a small fee.

Author: Annlee Ellingson  
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