The premier of Bermuda, David Burt, has argued that a QuadrigaCX-like situation could not have happened in Bermuda because of the country's existing legislation in regard to cryptocurrencies.
More than three months after the CEO of Canadian cryptocurrency exchange QuadrigaCX apparently died, taking the keys to $145m worth of cryptocurrency holdings to his grave, authorities are still trying to recover the money and figure out what went wrong.
David Burt said in an interview with Forbes that this could never have happened if Quadriga had been based in Bermuda.
If Quadriga was licensed under the Bermuda Monetary Authority, what has happened would not have been able to happen, because we have rules regarding the custody of master keys and making sure they’re not held by a particular individual"
"If Quadriga was licensed under the Bermuda Monetary Authority, what has happened would not have been able to happen, because we have rules regarding the custody of master keys and making sure they're not held by a particular individual," Burt said.
He was referring to the Digital Asset Business Act 2018, the centrepiece of the island's legislative framework for fintech and cryptocurrency businesses.
"It basically states what you have to do with the master keys, how those things have to be handled, and making sure that they cannot be lost, or if they are lost, there's a way for that recovery to happen," he added.
The premier said that 74 fintech companies have incorporated in Bermuda. The fintech companies operating in Bermuda also include a compliance-focused subsidiary of Binance, a Hong Kong-based cryptocurrency exchange.
While the country is seeking to attract more such businesses, companies will have to pass a "very stringent test" in order to prevent disasters like the one at Quadriga, Burt added.
"We recognise that any reputational damage from scams or otherwise can have an impact on our traditional financial services sector," he said, "and we don't want that, I would call it, cross-contamination."
Bermuda also implemented new regulations on initial coin offerings (ICOs), that require Bermudian ICO issuers to provide detailed information about "all persons involved with the ICO."
The company's directors are still in the process of trying to pay off creditors, and many have accused QuadrigaCX of suspicious activity or at least extreme negligence. The Royal Canadian Mounted Police have been looking into the implosion of Quadriga since Cotten's death was announced.
Now, as the confusion only deepens, the FBI is also investigating Quadriga. The plot is thickening as the fiasco unravels. There are now dozens of conspiracy theories and the Canadian press are frantically digging into the backgrounds of Cotten's wife - who allegedly has changed her name three times and has bought property worth millions of dollars in the last two years - and also the co-founder of Quadriga, who allegedly has been convicted of identity theft and fraud.