Lights illuminate USB cablesinside a 'mining rig' computer, used to mine cryptocurrency, inBudapest, Hungary, on Wednesday, Jan. 31, 2018. (Photo:Bloomberg)

(Bloomberg) –The death of a crypto executive trapped C$190million on a Canadian exchange. Or did it?

Ever since Quadriga CX revealed last month that founder GeraldCotten, who died in India in December, was the only person able toaccess the exchange's digital ledgers, scores of blockchain analysts, research companies andamateur sleuths have been arguing over whether some of the moneyhas been moving between accounts since he died and even if thecoins existed at all.

Cotten's widow set off the firestorm by seeking protection fromcreditors for the Vancouver-based company, saying that her latehusband was “very conscious about security” and she didn't know thepassword or recovery key of his encrypted laptop nor could she findanything written down despite repeated searches.

Without the key to the digital accounts, it is extremelydifficult to unlock the ledger and move the more than $144 millionin coins Quadriga CX had stored on its exchange.

While proponents of digital currencies argue that the incorruptiblenature of the blockchain is its primary feature, investors in thelikes of Bitcoin and Ether have frequently lost their digitalcodes, locking themselves out of their accounts with littlerecourse.

The argument that that's what happened with Quadriga didn't passthe smell test for many in the industry who are adept at scouringthe anonymous ledgers that underpin the decentralized networks forevidence of where digital coins may be stored.

“The Quadriga story doesn't make sense,” Emin Gun Sirer, aprofessor at Cornell University and co-director of the Initiativefor CryptoCurrencies and Contracts, wrote in an email Wednesday.“The one amazing thing about blockchains is that anyone can audit,in essence, any company.”

A judge is scheduled to deal with a motion to appoint lawyerswho'll represent Quadriga account holders at a hearing on Feb. 14in Halifax Supreme Court, according to a court filingWednesday.

The move comes after some holders asked the courts to haveBennett Jones LLP and McInnes Cooper represent them during the CCAAproceedings.

Jennifer Robertson, Cotten's widow, said her husband moved mostof the digital assets to cold storage, and experts she brought into try to hack into his other computers and mobile phone met withonly “limited success.” Attempts to circumvent an encrypted USB keyhave been foiled, she said in the court filing.

“If the funds are frozen and the cold wallet is inaccessible, itshould be possible for the exchange to provide the cold walletaddresses so their claims can be verified with the help of theblockchain,” Sirer said.

Analysis firms such as Elementus say that by examining theblockchain patterns, they can guess which particular walletsholding coins belong to. The researcher says it couldn't find anycold wallets holding Ether, one of the cryptocurrencies that'smissing. Instead, Quadriga was moving Ether to larger exchangesthrough mid-January, Elementus said.

At the same time, the patterns could mean that the exchange hadset up automatic transfers to larger exchanges when its walletbalances reached a certain amount, or, alternatively, that “there'ssome fishy business going on,” Elementus founder Max Galkasaid.

The virtually unregulated world of digital currencies has been abreeding ground for hacks and thefts since the Bitcoin was inventedmore than a decade ago.

There were at least five major attacks last year, alone, whileJapan, home to some of the world's most active digital-assetexchanges, has also hosted two of the biggest known crypto hacks:the Mt. Gox debacle of 2014 and the theft of nearly $500 million indigital tokens from Coincheck Inc. last January.

Jesse Powell, head of exchange Kraken, said it has some Quadrigabalances. Of about 230,000 Ether coins that Quadriga is supposed tohave had, only about 1,000 coins remain in its own wallets, Galkasaid.

“Not to be transparent” about where the money is exactly on ablockchain “is unusual,” said Christine Duhaime, a Canadian lawyerspecializing in anti-money laundering.

Cotten died of complications due to Crohn's disease in Jaipur,India, according to Robertson's affidavit and a statement of deathfrom J.A. Snow Funeral Home in Halifax. Richard Niedermayer, alawyer with Stewart McKelvey in Halifax who represented Robertson,declined to comment Wednesday.

Some 115,000 users had deposits at the exchange when it stoppedworking, according to Robertson's affidavit, filed on Jan. 31.

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