Crypto Exchange QuadrigaCX Missing $145 Mln After Death of Founder

[dothebeats]

That's where multi-sig wallets come in handy, but if one man don't trust his mates in sharing the part of a the password for unlocking the cold storage, then there really is a problem. First off, this is not his personal funds that we're talking about, but the funds of many other people trading on the platform. Second, he has a chronic, lifelong disease that could severely attack him at any given moment, so why wouldn't he created some sort of a backup plan for this? Lastly, why create and sign your will 2 weeks before the incident? Seems fishy but hey, we'll never know the true story after all!

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[bartolo]

Second, he has a chronic, lifelong disease that could severely attack him at any given moment, so why wouldn't he created some sort of a backup plan for this?

Even if he was healthy, he must have done it. When reports say he was the only one who knew the private keys of the wallets, is it to be supposed that he has memorized them? He must have saved the keys somewhere.

[squatter]

With more details emerging, it seems more likely that this isn't incompetence regarding cold storage but rather an exit scam: https://www.ccn.com/wheres-the-missing-150-million-crypto-exchange-quadrigacxs-fiasco-gets-weirder-with-new-research

Apparently there are no cold wallets, withdrawals were being paid from deposits, and the "inaccessible" wallets have continued to move funds after the alleged "death" of the owner. It seems like this owner has been regularly siphoning off funds for himself over the past several months and years, and was essentially running a Ponzi.

That's what it looks like, and my gut instinct is that he was running a fractional reserve. However, we should keep in mind this theory is based on a couple days worth of internet sleuthing by random people. If a cold wallet existed, it wouldn't belong to the same WalletExplorer address cluster as the hot wallet.

The exchange's logs should be able to confirm one way or the other. The truth will come out eventually.

[tmfp]

we should keep in mind this theory is based on a couple days worth of internet sleuthing by random people.

Quick, sign them up for DT.

[rdbase]

we should keep in mind this theory is based on a couple days worth of internet sleuthing by random people.

Quick, sign them up for DT.

There is a claim his name is not really what is on the death certificate but is Omar Dhanani or something like this.
Dont know the complete details but the truth will come out with all this internet sleuthing by these randoms.

[freedomno1]

Another reason why people should always control their private keys and why decentralization is the way to go.

I doubt these funds are lost forever, to be honest. He must've given access to someone or a group of people. If he was suffering from a disease, that would've been the logical thing to do.

I agree, the court was like so ... your bankrupt ... yet your not bankrupt today hmmm lets just continue.
And ya Crohns isn't typically fatal if diagnosed, had a friend with ulcerative colitis, was shitting blood almost died from blood loss since it was misdiagnosed for the longest time as a gluten allergy he got some medication and is stable now.

[Baofeng]

Now a new report surfaces, and then the plot thickens. This could possibility a exit scam by Cotten himself, because if was found out that the exchange has liquidity problem. So maybe there's no cold wallet after all.

The Canadian exchange claims it has lost access to $145 million of digital assets due to its founder’s death, however, it is likely that QuadrigaCX never had this money.

Money? What Money?

To make things worse, a respected crypto industry researcher, Crypto Medication, published a comprehensive blockchain analysis of Quadriga’s addresses and transactions. Based on its findings, the experts concluded that QuadrigaCX did not have as much Bitcoin as it claimed on the affidavit which it submitted to the Canadian court.

Even worse, the researchers revealed that the exchange had no identifiable cold wallet reserves. Instead, it used one client’s deposits to fund another client’s withdrawals. This explains the occasional delays in withdrawal execution, as sometimes QuadrigaCX did not have enough liquid funds at its disposal.

https://beincrypto.com/quadrigacx-saga-human-tragedy-or-yet-another-exit-scam/

[rdbase]

This guy was running another exchange back in 2008 from the reports. He was co running it with another known to the authorities.
From that one he would have access to alot of other identifications to assume.
So why was he allowed to run a company with the same type of business in a foreign country?

[Baofeng]

This guy was running another exchange back in 2008 from the reports. He was co running it with another known to the authorities.
From that one he would have access to alot of other identifications to assume.
So why was he allowed to run a company with the same type of business in a foreign country?

It's probably they're not aware of his past or just using another name to front his new business ventures. We all know criminals is like one step of the game, they know how to get away and with some people wiling to cooperate without knowing who he was, perhaps we was able to put up a new exchanges and now he pull one of the biggest exit scams in 2019.

[rdbase]

This guy was running another exchange back in 2008 from the reports. He was co running it with another known to the authorities.
From that one he would have access to alot of other identifications to assume.
So why was he allowed to run a company with the same type of business in a foreign country?

It's probably they're not aware of his past or just using another name to front his new business ventures. We all know criminals is like one step of the game, they know how to get away and with some people wiling to cooperate without knowing who he was, perhaps we was able to put up a new exchanges and now he pull one of the biggest exit scams in 2019.

I would think they were not aware because he was living in the states and then moved to canada to do this business there.
And could easily be lost in the move from country to country.
The other affiliation with the company changes his identification several times probably using the personal information from the kyc materials they collected from the previous exchange they ran.

[DomainTorrent]

Millions of dollars missing? We've heard of that before. Scenes like that happen again and again. My conclusion? Something fishy is going on.

[Baofeng]

Millions of dollars missing? We've heard of that before. Scenes like that happen again and again. My conclusion? Something fishy is going on.

Oh well, maybe something is fishy but I guess he is really dead, and who knows maybe he can send the private keys from after life? 

The only question now is how those account holders can get their funds back? Although  Ernst & Young entered the picture already as somewhat as a wallet custodian, it might take years though before everyone can be 'compensated'.

[rdbase]

They cracked the laptops security where the cold wallets were holding customers funds but they were emptied out already.
https://markets.businessinsider.com/currencies/news/crypto-ceo-died-with-passwords-to-137-million-but-the-money-is-gone-2019-3-1028009684?fbclid=iwar3tnbhazqie1u1wcumwlgyg0shoozyskw24efzof1yxfulygjlciuke5ss
Seems it was an exit scam after all.
We will probably see a photo of him on a south asian beach taken by a drone in a couple of months.

[o_e_l_e_o]

Probably worth noting that they say they've cracked the laptop's security - no mention of being able to gain access to private keys yet. They have ascertained the wallets are empty only from public blockchain records. So even if the funds were there, they wouldn't be able to reimburse the customers (yet?).

Still, this does seem like the final nail in the coffin for anybody who was still on the fence about whether or not this was a scam. Everything from the misspelled death certificate, to notarizing a will two weeks prior, to this, just screams of being a scam.

[Hueristic]

They cracked the laptops security where the cold wallets were holding customers funds but they were emptied out already.
https://markets.businessinsider.com/currencies/news/crypto-ceo-died-with-passwords-to-137-million-but-the-money-is-gone-2019-3-1028009684?fbclid=iwar3tnbhazqie1u1wcumwlgyg0shoozyskw24efzof1yxfulygjlciuke5ss
Seems it was an exit scam after all.
We will probably see a photo of him on a south asian beach taken by a drone in a couple of months.

He will be found hung in a cell and the funds will mysteriously have been moved again.

[Itskok]

Here is our update about the QuadrigaCX case, also published on our twitter account:
https://twitter.com/whitestream5/status/1103091778100576256

Since EY lately discovered some of QuadrigaCX cold wallet addresses, we managed to analyze some of them.
Together with insights that we already extract from QuadrigaCX hot wallets, we can shed some light on QuadrigaCX Bitcoin transactions from the last six month.

The time period we checked was since July 2018 to February 2019, the average Bitcoin price at this time frame is around $5,700.
We saw that both QuadrigaCX cold and hot wallets sent around 5,571 BTC to a suspicious intermediary wallet at this time period.
We suspect that this wallet belongs to QuadrigaCX too.

QuadrigaCX hot wallet sent to the suspicious intermediary wallet 3,432 BTC, which is around $19,500,000 US.
QuadrigaCX hot wallet:
https://www.walletexplorer.com/wallet/000009200775868e/addresses

QuadrigaCX cold wallet sent to the suspicious intermediary wallet 2,139 BTC, which is around $12,200,000 US.
QuadrigaCX cold wallet:
https://www.blockchain.com/btc/address/1JZJaDDC44DCKLnezDsbW43Zf8LspCKBYP

The suspicious intermediary wallet:
https://www.walletexplorer.com/wallet/006daa655b240256/addresses

The suspicious wallet has interactions with more Bitcoin exchanges and not just from QuadrigaCX, but most of his incomes are from QuadrigaCX.
The suspicious wallet sent most of his funds to two Chinese exchanges, Huobi and Binance.

Around 1,176 BTC were sent to Binance, which is $6,700,000 US.
Around 5,263 BTC were sent to Huobi, which is $30,000,000 US.

Huobi wallet:
https://www.walletexplorer.com/wallet/Huobi.com-2

Binance wallet:
https://www.walletexplorer.com/wallet/0000011bd9c73aab/addresses

Thank you.
whitestream - Blockchain Intelligence
https://whitestream.io

[Baofeng]

I thought I need to update this thread:

https://documentcentre.eycan.com/eycm_library/Quadriga%20Fintech%20Solutions%20Corp/English/CCAA/1.%20Monitor's%20Reports/6.%20Fifth%20Report%20of%20the%20Monitor/Fifth%20Report%20of%20the%20Monitor%20dated%20June%2019,%202019.PDF

(g) Mr.  Cotten  created  Identified  Accounts  under  aliases  where  it  appears  that Unsupported  Deposits  were  deposited  and  used  to  trade  within  the  Platform resulting in inflated revenue figures, artificial trades with Users and ultimately the withdrawal of Cryptocurrency deposited by Users; and 
(h) Substantial Funds were transferred to Mr. Cotten personally and other related parties. The Monitor has not located any support justifying these transfers. 

So it means that Cotten himself was playing the money of users who deposited in QuadrigaCX to create fake volumes. The question is, are other exchanges doing this kind of malpractices. It's scary if you're going to think of it, but sadly Cotten died and leave everyone to imagine what those guys are really doing specially during the peak in 2017 and early 2018 with lots of money at their disposal.

[Kemarit]

Ah and the saga (and drama) still continues. Looks like investigators hands are full right now with new evidence unearthed by the team. The only important thing that we need to know though is that if by chance they recovered and liquidated some assets be it from his widow and from people who works with Cotten, account holders should get what they deserved for. But I guess this will drag for years and might be similar to the Mt. Gox case, which up to now, the ghost is still haunting us all.

[squatter]

There was a little-discussed update in the case last week. Gerald Cotten's widow is forking over nearly $9 million of her personal assets to the bankruptcy trustee to benefit the victims. This is part of a voluntary settlement agreement that presumably allows her to dodge any liability from the QuadrigaCX fallout.

According to a new report by EY Canada, Robertson will be turning over all assets except for roughly $162,700 in personal assets, which include cash, her retirement savings, a 2015 Jeep, some jewelry, personal furnishings, clothing and some outstanding shares of Quadriga and affiliated entities.

A previous report estimated the total value of Cotten’s estate to include roughly $9 million ($12 million CAD) in assets, including luxury vehicles and more than a dozen properties in Nova Scotia.

EY said in Monday’s report that it intends to liquidate these assets for Quadriga’s stakeholders, including the users who lost funds when the exchange collapsed.

[o_e_l_e_o]

That's only fair she hands all that back. After all, it was all paid for illegally by using clients' funds. It doesn't even come close to the $150 million-ish that is still outstanding, though.

Given the volume of bitcoin and other crypto that "went missing" or is "inaccessible", do we believe that she doesn't own any at all? The list of assets she is keeping doesn't mention crypto at all. Given how scummy Gerald Cotten was, I'd be surprised if he hadn't stashed some away for his wife somewhere.