Digital Estate Planning Cautionary Tale: Investors Lose $190 Million in Bitcoin After The Only Person With The Password Dies
Posted Tuesday, February 5, 2019 by Pivotal Law Group
There are many reasons to regularly update your estate plan, but one particularly important reason is to ensure family and business colleagues have access to critical information in the event of your unexpected death or incapacity. A recent cautionary tale highlights the importance of planning ahead to make sure your business and family plans function smoothly if something unexpected happens.
On December 31, 2019, the Canadian cryptocurrency exchange QuadrigaCX filed for bankruptcy after announcing losses of $190 million. You might think this is another example of Bitcoin's high-profile reversals. It's actually much simpler - and likely much more frustrating for the exchange's investors.
The exchange lost $190 million simply because the only person who knew the password died unexpectedly from complications of an existing but generally benign medical condition while on a business trip.
This unfortunate episode is an reminder of the importance of regular estate plan updates that include the principal's digital assets. Even besides bitcoin, 21st-century people maintain assets of tremendous value in purely digital form; sometimes monetary, or sometimes sentimental. It's unfortunately far too routine for individuals to pass away without accounting for these assets, leaving their loved ones and professional colleagues in the dark.
This also underscores the importance of maintaining a valid power of attorney to allow family and business arrangements to continue to function even in the event of the principal's incapacity.
Pivotal Law Group attorney McKean Evans is a regular writer and speaker regarding digital estate planning and powers of attorney for bar associations, businesses and community groups. If you have questions regarding a power of attorney or digital estate planning issue, contact McKean for a free consultation.