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Author Topic: [2019-02-06] Locked bitcoins in QuadrigaCX might be another exit scam.  (Read 428 times)
rdbase
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February 07, 2019, 04:14:51 AM
Last edit: February 07, 2019, 04:12:06 PM by rdbase
 #21

There are two threads about it since it was announced late last month about the possibility of an exit scam by the exchange.
https://bitcointalk.org/index.php?topic=5105266 & https://bitcointalk.org/index.php?topic=984498.0
Where there is a video I posted that uncovers even more about a second person who might be the one who is behind it or even Cottons death.

There is a theory he ran another exchange called Midas gold back in 2008 with a guy by the name of Omar Dhalini.
I think they planned this setup and exit all along. Could be Gerald was the fall guy and Omar is the one who has control of the funds by multi-sig wallets. And is just waiting until the heat is off the bitcoin but is moving small amounts of litecoin as others have followed those transactions.
This theory is explained in this video by coinspice.
https://www.youtube.com/watch?v=tiy1K6-mf4s

From details already uncovered the original story is becoming less believable everyday.

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February 07, 2019, 05:54:39 AM
 #22

Now if the exchange were insured, like all Japanese licenced ones are... we're seeing a first use case for insured exchanges.

I honestly wouldn't put much thought or hope into that, because insurers are out to do one specific thing, which is making sure that they don't have to cough up any sort of amount, or in the worst case scenario, an amount that's far below that what exchanges are insured for.

they'll pay out according to their executed agreements or they'll fight it out in court. insurance companies don't like costly legal battles any more than paying out claims. there's no reason to assume that insurance will work much differently than for any other industry.

the risk due to irreversibility of thefts should be priced in accordingly, meaning steep premiums. i think we're already seeing the effect of that: coinbase only insures 2% or less of their crypto---whatever is in their hot wallets. https://www.coinbase.com/legal/insurance?locale=en-US

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February 12, 2019, 09:32:52 PM
 #23

There are two threads about it since it was announced late last month about the possibility of an exit scam by the exchange.
https://bitcointalk.org/index.php?topic=5105266 & https://bitcointalk.org/index.php?topic=984498.0
Where there is a video I posted that uncovers even more about a second person who might be the one who is behind it or even Cottons death.

There is a theory he ran another exchange called Midas gold back in 2008 with a guy by the name of Omar Dhalini.
I think they planned this setup and exit all along. Could be Gerald was the fall guy and Omar is the one who has control of the funds by multi-sig wallets. And is just waiting until the heat is off the bitcoin but is moving small amounts of litecoin as others have followed those transactions.
This theory is explained in this video by coinspice.
https://www.youtube.com/watch?v=tiy1K6-mf4s

From details already uncovered the original story is becoming less believable everyday.

Sorry if he's really dead. But what I'm seeing here is a clear exit scam. A legit company will not authorize only one person to hold vital info and passwords. There are others who are responsible on this matter. Just my 2 cents.
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February 12, 2019, 09:40:17 PM
 #24

A legit company will not authorize only one person to hold vital info and passwords.
He was the sole owner of the company, and everyone else who worked for it was his employer. As it is a private company 100% under his control, he can do whatever he wants with it. If he wants to hold all the logins, passwords, funds, private keys, and whatever else himself with no back ups, then he can. Is it stupid? Absolutely, but that doesn't stop him from doing it. I wouldn't be surprised if there are other exchanges out there with similarly stupid set ups for holding their users' funds.



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February 13, 2019, 10:59:11 PM
 #25

Does everyone remember the story of QuadrigaCX's founder, who was claimed to be the only person in control of the exchange's cold wallet, died in India on December, 2018? There are new stories surfacing that the people left running the exchange are using the founder's death to exit scam.

We might begin witnessing more small exchanges doing exit scams if the bear market extends out longer.

Also, do not trade in small and unknown exchanges.

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

People should follow this, I don't know why people go for every exchange! Last year, we have seen many exchanges ICO came up and then they vanish. I haven't found any new exchange doing well this year. Even Forkdelta, Etherdelta is better than a new good looking exchange!

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February 14, 2019, 03:42:15 AM
 #26

A legit company will not authorize only one person to hold vital info and passwords.
He was the sole owner of the company, and everyone else who worked for it was his employer. As it is a private company 100% under his control, he can do whatever he wants with it. If he wants to hold all the logins, passwords, funds, private keys, and whatever else himself with no back ups, then he can. Is it stupid? Absolutely, but that doesn't stop him from doing it. I wouldn't be surprised if there are other exchanges out there with similarly stupid set ups for holding their users' funds.




That might be what the people behind the exit scam want. That we think they are stupid for having such a set up. It would be more stupid to accept it and let them get away with it without an investigation, I reckon.

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March 05, 2019, 02:31:42 AM
 #27

News update. I reckon QuadrigaCX did not do an exit scam, however, it was a scam or it was running a scam hehehe. It appears that from the reported updates, QuadrigaCX never stored all of the users' coins in the exchange but used other exchanges to store the coins.

It was not clear why, however this appears to be part of another money laundering scheme or a basic scam.



QuadrigaCX, the Canadian cryptocurrency exchange that purportedly lost $250 million CAD ($190 million USD) of customer funds when the company’s CEO died, was appointed the professional services firm Ernst & Young (EY) as their monitor by court order on February 5, 2019.

The Big Four auditing firm has since released 3 reports in the creditor protection proceedings of QuadrigaCX. The third report was released on March 1, in which the firm identified 6 crypto Quadriga wallets primarily used to store Bitcoin (BTC).

What’s interesting is that out of the 6 wallets identified, all but 1 received no deposits and were inactive since April 2018. There was only 1 wallet that had an inadvertent Bitcoin transaction of nearly $500,000.

The third Ernst & Young report states:

“To date, the Applicants have been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Cold Wallets for deposits in April 2018, however, the Monitor and Management will continue to review the Quadriga database to obtain further information.”


Source https://www.investinblockchain.com/quadriga-update-wallet-empty-unused-since-april-2018-ernst-young/

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March 10, 2019, 06:56:50 AM
 #28

This story gets juicier by the day.

Now it looks like they had created "fictitious" accounts to trade against customers funds, for the sake of pumping volume, as well as having a reason to move BTC to non-exchange related addresses. They also had their own unbacked CAD version of Tether, called "QuadBucks."

From reddit:

Here's what they were doing:

Customer deposits BTC;

Quadriga "artificially" creates a deposit of imaginary "Quadbucks" to their fake trading accounts;

Quadriga buys the customer BTC and shows in the customer account that they have Quadbucks;

Customer can't withdraw cash until actual customers deposit actual cash (because the "cash" that bought their BTC never existed);

Quadriga sends the BTC they bought with imaginary Quadbucks to personal addresses.

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March 10, 2019, 07:33:24 AM
 #29

I'm totally done with this QuadrigaCX issues/scams. I was one of those who open up a thread as pointed out by rdbase earlier and I still hold my opinion that the money is all gone and all those wallet are fictitious. And now it gets more juicier with what @nutildah, has posted and I'm sure that there's no way that account holders can get their funds, sorry to say.

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March 10, 2019, 09:16:14 AM
 #30

In India it is very easy to fake the documents or even fake the death news and create a real death Certificate. so that is why he came to India to do this exit scam. Why did he has to come to India when their is clear that cryptocurrency is not legal to use in India.

 
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March 10, 2019, 12:55:21 PM
 #31

It looks like they were emptying addresses before the owner "died". I read somewhere that they finished analysing the addresses and there were large withdrawals prior to his death, and that whole story about them not having private keys and funds still being on addresses is false.
Also, there's that thing with his wife taking money from the exchange after his death... It's obvious that this guy is hiding somewhere or maybe his wife emptied the addresses and hired some goons to take care of him in India.

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March 10, 2019, 01:13:56 PM
 #32

It looks like they were emptying addresses before the owner "died".
8 months before he died, many of the so called "cold wallets" were emptied. This has been in the works for a long time, which is why they've managed to make off with such a large sum of money.


Quadriga sends the BTC they bought with imaginary Quadbucks to personal addresses.
There's plenty of evidence that they were withdrawing customers' coins to deposit addresses on other exchanges, so they were clearly cashing out significant amounts of BTC they didn't own and converting it to fiat. Given that this went undetected for so long, I wouldn't be in the least bit surprised if it turned out they had been using Quadriga customers' KYC documents to fraudulently open accounts at other exchanges other their customers' names.

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March 10, 2019, 02:21:59 PM
 #33

In India it is very easy to fake the documents or even fake the death news and create a real death Certificate. so that is why he came to India to do this exit scam. Why did he has to come to India when their is clear that cryptocurrency is not legal to use in India.
They do make things to be well arranged without even knowing that people can figure it out on what they are doing.They already know about India when it comes to fake events  Grin
Lots of questions but we can already presume on his motive.

Quadriga sends the BTC they bought with imaginary Quadbucks to personal addresses.
There's plenty of evidence that they were withdrawing customers' coins to deposit addresses on other exchanges, so they were clearly cashing out significant amounts of BTC they didn't own and converting it to fiat. Given that this went undetected for so long, I wouldn't be in the least bit surprised if it turned out they had been using Quadriga customers' KYC documents to fraudulently open accounts at other exchanges other their customers' names.
Most likely the case where if deposits do directly go into other exchange wallets then those documents have been submitted by customers itself would be used on the process.

There are already lots of obvious modus but this case has still no end or conclusion.


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March 10, 2019, 10:13:31 PM
 #34

I won't be surprised if it is
where big money involved it is very easy to get seduced and plot something like that
the owner could be dead alright and he , probably is
but it I don't believe he hasn't planned a force majeur like this and hadn't prepared  a backup
maybe the group of people who learnead about it could have killed him and orchestrated the whole scam
guess we will find out sooner rather than later

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March 14, 2019, 01:52:15 AM
 #35

Another news update. Rest in peace Gerald Cotten, however this might be disrespectful of me to say. Quadriga is beginning to appear more like a small player in a bigger money laundering ring. I have said this before, however I believe it more now.

I reckon Gerald might not be trying to save the exchange's customers because he cared. He was personally laundering money using his personal account.




Gerald Cotten, the deceased founder and CEO of crypto exchange QuadrigaCX, used his own cash to make customers whole during a legal battle with a bank, his widow said.

Jennifer Robertson, Cotten’s wife and executor of his estate, said in a statement sent to CoinDesk Wednesday that Cotten told her he was putting his own funds into the exchange after the Canadian Imperial Bank of Commerce (CIBC) froze its fiat holdings in 2018 over questions about their origin.

In the statement sent by law firm Stewart McKelvey, she said:

“While I had no direct knowledge of how Gerry operated the business, he told me that he had been putting his own money back into QCX to fund user withdrawals in 2018 while the CIBC money remained frozen. I believe Gerry had the best interests of the business in mind, and cared for his customers.”


https://www.coindesk.com/stewart-mckelvey-quadriga-law-firm

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March 14, 2019, 07:12:24 AM
 #36

.

Also, do not trade in small and unknown exchanges.

.
This is great advice specially to newbies and to the noobs whos seeking for something with cheaper fees,because most of the smaller exchangers that appears now are here to scam or even hacks us,so be careful in each exchanges we will engaging and better use those stable one even with high fees atleast you are secured and safer
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March 14, 2019, 07:44:08 AM
 #37

Another news update. Rest in peace Gerald Cotten, however this might be disrespectful of me to say. Quadriga is beginning to appear more like a small player in a bigger money laundering ring. I have said this before, however I believe it more now.

I reckon Gerald might not be trying to save the exchange's customers because he cared. He was personally laundering money using his personal account.

Jennifer Robertson, Cotten’s wife and executor of his estate, said in a statement sent to CoinDesk Wednesday that Cotten told her he was putting his own funds into the exchange after the Canadian Imperial Bank of Commerce (CIBC) froze its fiat holdings in 2018 over questions about their origin.

In the statement sent by law firm Stewart McKelvey, she said:

“While I had no direct knowledge of how Gerry operated the business, he told me that he had been putting his own money back into QCX to fund user withdrawals in 2018 while the CIBC money remained frozen. I believe Gerry had the best interests of the business in mind, and cared for his customers.”[/i]

it may have nothing to do with a bigger money laundering ring. he/they were apparently spreading thousands of BTC around to other exchanges---probably to buy/sell what they needed ($$ and altcoins) to cover customer withdrawals. maybe they got some bank accounts frozen because they were trying to move huge amounts of money in from foreign exchanges instead of transacting like a normal exchange would. with frozen fiat accounts (not to mention they were already slow-paying crypto depositors) it looks like cotten was just desperately trying to keep the exchange afloat.

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March 15, 2019, 01:09:06 AM
 #38

@figmentofmyass. The frozen bank accounts might be because there was a suspicion of money laundering. However, instead of shutting down,or exit scamming, Gerald Cotten continued to deposit money to the exchange out of the goodness of his heart? I reckon he was using his personal accounts to launder money.

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March 15, 2019, 03:28:31 AM
 #39

@figmentofmyass. The frozen bank accounts might be because there was a suspicion of money laundering. However, instead of shutting down,or exit scamming, Gerald Cotten continued to deposit money to the exchange out of the goodness of his heart? I reckon he was using his personal accounts to launder money.

not out of the goodness of his heart IMO but out of self preservation. if the ponzi imploded like mt gox, he probably would have gone straight to prison for fraud, embezzlement, record tampering etc. so if there was no liquidity for customer withdrawals, he had two choices: come clean and face prison, or put in his own $$ in hopes that the CIBC funds would eventually be recovered. i guess he chose the latter and tried to keep the exchange afloat.

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March 16, 2019, 01:15:40 AM
 #40

However, why was QuadrigaCX sending 600k ethereum from cold storage to different exchanges? Why do that? I reckon this has already occured before the banks have frozen their accounts.

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