A cautionary tale highlighting the pitfalls that can hit a cryptocurrency exchange has emerged in Canada.

The country’s largest cryptocurrency exchange, QuadrigaCX, owes its customers about $190 million in cryptocurrency and cash.

It is thought that tens of millions of cryptocurrency is locked up in an offline storage facility. The problem is those riches are now out of reach after the death of the exchange’s founder — the only person known to have the password for the “cold wallet” storage.

The situation has been laid bare in a filing at the supreme court of Nova Scotia, where Quadriga and related companies have made an application for creditor protection.

The filing was first reported by CoinDesk, a cryptocurrency news company.

Gerald Cotten was the sole director and officer of the coin exchange and its related companies when he died, aged 30, from complications from Crohn’s disease while visiting India in December.

His widow, Jennifer Robertson, in a sworn affidavit court document said Quadriga and the other companies had no offices and their business was conducted on Mr Cotten’s computer.

Quadriga was a platform that allowed customers to buy and sell cryptocurrencies, with accounts being credited either by the depositing of cash or cryptocurrency.

A portion of the cryptocurrencies in the custody of the exchange were held in a “hot wallet” — an online storage facility where they could be accessible for immediate release to pay for withdrawals. There was also a “cold wallet” for offline storage, and this is where the majority of the coins in customers’ accounts were kept to protect against hacking or virtual theft.

Customers could also withdraw cryptocurrency from their account and place it in their own digital wallet.

At the end of January, 115,000 of the 363,000 registered users on the Quadriga database held balances at the exchange. In December, it was estimated the total obligations of Quadriga to its affected users was about $190 million.

In the affidavit, Ms Robertson, who was not involved in the business while Mr Cotten was alive, said: “The laptop computer from which Gerry carried out the companies’ business is encrypted and I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.”

She added: “After Gerry’s death, Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost.”

An expert is assisting in attempts to recover the information, but so far with limited success. The cryptocurrencies the exchange dealt with were bitcoin, bitcoin gold, bitcoin cash, bitcoin cash SV, litecoin and ether.

Ms Robertson said Quadriga and its related companies never had corporate bank accounts because “banks did not want to deal with the companies because of the cryptocurrency business”. Instead, third-party payment processors were used to receive and pay funds.

However, Quadriga’s access to cash has been “severely compromised” by its inability to negotiate bank drafts provided by the payment processors.

“As a result, Quadriga is not currently able to complete the transactions which its users want to process,” Ms Robertson stated, explaining why a stay of proceedings was sought. “If this situation continues, the users may seek legal proceedings against Quadriga which would only serve to complicate an already difficult situation.”

Ms Robertson, in the affidavit, also noted: “There has been a significant amount of commentary on Reddit and other web-based platforms about the state of Quadriga, Gerry’s death (including whether he is really dead) and missing coins”, and that she has received threats and slanderous comments.