Month: December 2019

In late January, the wife of a cryptocurrency-exchange founder testified that her husband inadvertently took at least $137 million of customer assets to the grave when he died without giving anyone the password to his encrypted laptop. Now, outraged investors want to exhume the founder’s body to make sure he’s really dead.

The dubious tale was first reported in February, when the wife of Gerry Cotten, founder of the QuadrigaCX cryptocurrency exchange, submitted an affidavit stating he died suddenly while vacationing in India, at the age of 30. The cause: complications of Crohn’s disease, a bowel condition that is rarely fatal. At the time, QuadrigaCX lost control of at least $137 million in customer assets because it was stored on a laptop that—according to the widow’s affidavit—only Cotten knew the password to.

Widow Jennifer Robertson testified that she had neither the password nor the recovery key to the laptop. The laptop, she said, stored the cold wallet—that is, a digital wallet not connected to the Internet—that contained the digital currency belonging to customers of the exchange. In addition to at least $137 million in digital coin belonging to more than 100,000 customers, another $53 million was tied up in disputes with third parties, investors reported at the time.

Robertson had testified that she conducted “repeated and diligent searches” for the password but came up empty. She went on to say she hired experts to attempt to decrypt the laptop, but they too failed. One expert profiled Cotten in an attempt to hack the computer, but that attempt also came to nothing.

Questionable circumstances

On Tuesday, The New York Times reported that the amount exchange clients were unable to access is now calculated to be $250 million. Meanwhile, law enforcement officials in both Canada—where QuadrigaCX is located—and in the United States are investigating potential wrongdoing, and investors are clamoring for proof Cotten is actually dead.

Lawyers representing exchange clients on Friday asked Canadian law enforcement officials to exhume his body and conduct an autopsy “to confirm both its identity and the cause of death,” the NYT said. The letter cited “the questionable circumstances surrounding Mr. Cotten’s death and the significant losses” suffered in the incident. The letter went on to ask that the exhumation and autopsy be completed no later than “spring of 2020, given decomposition concerns.”

Quadriga didn’t disclose Cotten’s death until January 14, in a Facebook post, more than a month after it was said to have occurred. The QuadrigaCX platform went down on January 28, leaving users with no way to withdraw funds they had deposited with the exchange. Clients have taken to social media ever since to claim the death and loss of the password were staged in an attempt to abscond with their digital coin.

Besides an investigation by the Supreme Court of Nova Scotia, the FBI is also conducting an investigation into the company in conjunction with the IRS, the US Attorney for the District of Columbia, and the Justice Department’s Computer Crime and Intellectual Property Section.

One of the investigations has already unearthed circumstances that some may find suspicious. According the NYT, a report from Ernst & Young (an auditing firm hired by the Supreme Court of Nova Scotia), QuadrigaCX didn’t appear to have any “basic corporate records,” including accounting records. More concerning, the report said the exchange had transferred “significant volumes of cryptocurrency” into personal accounts held by Cotten on other exchanges. The report also documented the transfer of “substantial funds” to Cotten personally that had no clear business justification.

How the exhumation and autopsy would lead to the recovery of the missing cryptocurrency is not clear. But they might go a long way to confirming or debunking the claims Cotten died at the time and in the manner disclosed to QuadrigaCX customers.

QuadrigaCX and the case of the missing $250 million is the kind of event that would be unthinkable for most financial institutions. In the frothy and largely unregulated world of cryptocurrencies, such debacles are a regular if not frequent occurrence.

It’s true that inorganic users don’t yell at customer-service reps or trash-talk companies on Twitter. But connected devices can also benefit from some less-obvious upgrades that 5G should deliver—and we, their organic overlords, could profit in the long run.

You may have heard about 5G’s Internet-of-Things potential yourself in such gauzy statements as “5G will make every industry and every part of our lives better” (spoken by Meredith Attwell Baker, president of the wireless trade group CTIA, at the MWC Americas trade show in 2017) and “It’s a wholly new technology ushering in a new era of transformation” (from Ronan Dunne, executive vice president and CEO of Verizon’s consumer group, at 2019’s Web Summit conference).

But as with 5G in the smartphone and home-broadband contexts, the ripple effects alluded to in statements are potentially huge—and they will take years to land on our shores. Yes, you’ve heard this before: the news is big, but it’s still early days.

Massively multiplayer mobile bandwidth

The long-term map for 5G IoT promises to support a density of devices far beyond what current-generation LTE can deliver—up to a million “things” per square kilometer, versus almost 61,000 under today’s 4G. That density will open up possibilities that today would require a horrendous amount of wired connectivity.

For example, precision-controlled factories could take advantage of the space in the airwaves to implement extremely granular monitoring, and 5G IoT promises to do that job for less. “You can put tons of environmental sensors everywhere,” said Recon Analytics founder Roger Entner. “You can put a tag on every piece of equipment.”

“Either I upgrade this to fiber to connect the machines, or I use millimeter-wave 5G in the factory,” echoes Rüdiger Schicht, a senior partner with the Boston Consulting Group. “Everything we hear on reliability and manageability of that infrastructure indicates that 5G is superior.”

Millimeter-wave 5G runs on bands of frequencies starting at 24GHz, far above the frequencies employed for LTE. The enormous amounts of free spectrum up there allow for gigabit speeds—at the cost of range, which would be limited to a thousand feet or so. That still exceeds Wi-Fi’s reach, though.

Low-band 5G on the same frequencies today used for 4G doesn’t allow for a massive speed boost but should at least cover far more ground, while mid-band 5G should offer a good mix of speed and coverage—at least, once carriers have more free spectrum on which to provide that coverage. (If you’d like a quick refresher on the various flavors of 5G, our story from a couple of weeks ago has you covered!)

In the United States, fixing those spectrum issues hinges on the Federal Communications Commission’s recently-announced plan to auction off 280MHz of so-called C-band spectrum, between 3.2GHz and 3.98GHz, on a sped-up timetable that could see those bands in service in two to three years.

And that means there’s some time to figure things out. Companies aren’t lighting up connected devices by the millions just yet.

The current 5G standard—formally speaking, 3GPP Release 15—does not include support for the enormous device density we’re talking about. That will have to wait until Release 16, now in its final stages of approval, although Entner warns that we won’t see compatible hardware for at least another year or two.

Many IT workers worry their positions will become obsolete as changes in hardware, software, and computing tasks outstrip their skills. A former contractor for Siemens concocted a remedy for that—plant logic bombs in projects he designed that caused them to periodically malfunction. Then wait for a call to come fix things.

On Monday, David A. Tinley, a 62-year-old from Harrison City, Pennsylvania, was sentenced to six months in prison and a fine of $7,500 in the scheme. The sentence came five months after he pleaded guilty to a charge of intentional damage to a protected computer. Tinley was a contract employee for Siemens Corporation at its Monroeville, Pennsylvania, location.

According to a charging document filed in US District Court for the Western District of Pennsylvania, the logic bombs Tinley surreptitiously planted into his projects caused them to malfunction after a certain preset amount of time. Because Siemens managers were unaware of the logic bombs and didn’t know the cause of the malfunctions, they would call Tinley and ask him to fix the misbehaving projects. The scheme ran from 2014 to 2016.

Tinley will be under supervised release for two years following his prison term. He will also pay restitution. The parties in the case stipulated a total loss amount of $42,262.50. Tinley faced as much as 10 years in prison and a $250,000 fine.