The Curious Case Of QuadrigaCX And Gerry Cotten
You all have heard about QuadrigaCX, of course. And I hope you all follow the unbelievable drama – or, rather a farce – related the death (or, maybe not even) of its founder, Gerry Cotten. I mean, there will be a movie about this curious case. The whole story just screams “Hollywood blockbuster.” Maybe I should start taking bets on who’s gonna portray Mr. Cotten. And no, I won’t take any of your shit coins.
Since I really love stories which strip off scams, frauds, and stupidity of the crypto world, I decided to put together an overview of the QuadrigaCX’s stupendous fall. The shit surfaced in January when the oldest Canadian crypto exchange went offline for “maintenance.” This happened amidst concerns regarding a prolonged fight with the CIBS (Canadian Imperial Bank of Commerce) over $22M in frozen funds. The case started in January 2018! Not to mention, that QuadrigaCX’s founder was declared dead in December 2018.
Next, the media reported that the exchange is unable to repay $190M to its customers – read our take on it here. The rollercoaster of the downfall was spiced up by rumors about “death faking” and “significant funds” movement right before Cotten’s death. Call Sherlock, ffs! To make the matter even more ridiculous, it’s become known that Gerry Cotten was the only person who knew the password to the “cold storage.” Meaning, the funds of the clients are inaccessible.
There is more: the exchange has lost another $500K in Bitcoin… by mistake. I’m not kidding here, although the whole case is rapidly reaching the highest level of absurdity and surrealism. “On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 [CAD] to Quadriga cold wallets which the Company is currently unable to access. The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.” Amazing!
And to round things up nicely, here is another revelation: Gerry Cotten revealed how his exchange stores clients’ assets… five years ago in a podcast. “At QuadrigaCX, we’re obviously holding a bunch of Bitcoins that belong to other people who have put them onto our exchange. So what we do is we actually store them offline in paper wallets, in our bank’s vault in a safety deposit box because that’s the best way to keep the coins secure.” Now, everyone should start scanning online archives for other podcasts, maybe Mr. Cotten has dropped the password somewhere in between boasting about his revolutionary exchange.
UPD: it appears, that there are no cold wallets with ETH, after all. The Wall Street Journal has an article on that and it’s a movais ton to doubt the WSJ. Another amazing piece of news: lots of crypto assets were sent to ShapeShift exchange (at least 280,000 ETH), cash withdrawals with no accounting records were “noticed”. Nice. Getting the biggest popcorn bowl ready – this ridiculous endeavour unfolds in an unpredictable fashion.
And another UPD: Coinbase has an opinion on the case too. Because, yeah, not a single crypto-related matter can develop without Coinbase being mentioned. Like, Geeeee, they’re everywhere. Anyways, their CEO believes Gerry Cotten didn’t plan fraud. Coinbase has conducted their own research and came to that conclusion. Wow, seriously? What type of research? Research based on what data? Who performed the research? What methodology was used? Do you see what I mean? These «conclusions» are absolutely pointless, because no one knows how they were made. Just because it’s coming from Coinbase doesn’t mean it’s relevant.