It seems like either they were insolvent or slowly being robbed by a security consultant. Either way, the death of the CEO was the perfect cover..
In one of the most intriguing crypto mysteries of 2019 thus far, analysts and investigative journalists recently discovered that a recently-deceased CEO’s one-man-show might not be the convenient excuse as to why $190 million in crypto assets have gone missing from Canada’s biggest cryptocurrency exchange.Highlights of the
story:
What is Known vs. What is SpeculatedThe hunt is on, and in the brief time since Kraken posted their reward offer, lots of new information concerning QuadrigaCX has come to light. Here are some interesting aspects of the story that are known for sure:
- Gerald Cotten changed his will 12 days before his death, naming his wife as the sole heir of his estate. Cotten’s name was mis-spelled on his official death certificate, which lists his death date as December 9th (news of his death was not made public until February).
- Over $100 million worth of ETH was withdrawn from Quadriga’s exchange wallets in December, just days before Cotten’s death, sent to addresses belonging to exchanges Bitfinex and Poloniex.
- Contrary to claims stated in an affidavit filed by Cotten’s wife, BTC wallets under the control of Quadriga were found by auditors to have been empty since April 2018, and did not contain the tens of millions of dollars in customer funds believed to have been located there.
- The FBI is now working with the Royal Canadian Mounted Police in order to track down the location of the missing funds, inviting those with information related to the matter to step forward to help their investigations.
Here are some allegations that have substantial evidence to back them:
- One of Quadriga’s biggest shareholders, Michael Patryn, is thought to have been arrested and charged with financial fraud crimes in the U.S. under another name, Omar Dhahani, in 2004. Dhanani was an active member of Shadowcrew.com, which was a site described by prosecutors as a “hub of online identity theft activity.” The website was mainly used to traffic stolen credit card and bank card numbers, per court filings associated with the case. As a result of his involvement, Dhahani was sentenced to 18 months in federal prison and released in May 2007.
- In 2008, Dhahani is thought to have started a website called Midas Gold Exchange, under the name Omar Patryn, launched using the URL M-Gold.com. The website offered digital currency exchange services, focusing heavily on an anonymity-based virtual currency called Liberty Reserve, which was later shut down by U.S. prosecutors, who dubbed it “a criminal business venture, one designed to help criminals conduct illegal transactions and launder the proceeds of their crimes.”
- Though denying being the same person as Omar Patryn to reporters, Michael Patryn, who acted as a security consultant to Quadriga in addition to being a major shareholder, was contacted by staff at The Globe and Mail through an email address associated with M-Gold.com. Canadian court documents also tie the two together by mentioning Omar Patryn as an alias of Michael Patryn, and also through a P.O. box associated with Midas Gold Exchange Inc. Six months later, Patryn co-founded QuadrigaCX with Gerald Cotten, however he quickly relinquished any executive duties in favor of becoming a shareholder.
- According to Coinbase CEO Brian Armstrong, QuadrigaCX was not likely to have been perpetrating an exit scam, noting that the market conditions to do so would have been horrible for an exchange founded back in 2013. Instead, he believes the exchange suffered a “multimillion dollar bug” in July 2017, in which millions of dollars’ worth of customer ETH went missing or became locked up in a miscoded smart contract. Quadriga was well-aware of the problem, having issued a statement about it on Reddit while simultaneously claiming that user funds were not at risk, and that only company profits had been affected.
- As a result, Armstrong believes Quadriga found itself playing “catch up,” trying to replace lost funds with new ones, of which became too impossible a task to manage as the crypto markets rapidly declined through early 2018. In the months following the steep market sell-off, the exchange became insolvent and was on the verge of bankruptcy, though this information was never disclosed to its customers.
- In order to help alleviate insolvency issues incurred during the “bug drain” outlined by Armstrong, QuadrigaCX created fake accounts on its own platform to trade against its users with a “significant volume” using “artificially created” deposits and then withdrew actual assets to accounts not associated with QuadrigaCX. This would also help explain issues with delayed fiat withdrawals stemming back to early 2018, well before Cotten’s passing.
- The country of India, and specifically the region where Cotten was pronounced deceased, is known for having a “fake death mafia,” which lends credence to the theory that he may have faked his own death. However, Kraken CEO Jesse Powell is “99% certain” that Cotten is actually deceased.[/color]
You can read the story in its entirety (and with the pictures) here:
https://coinclarity.com/quadrigacx-missing-crypto-investigation/
