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Canadian crypto exchange CEO reportedly skimmed currency into privately owned accounts

By Cal Jeffrey · 10 replies
Jun 24, 2019
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  1. According to The Wall Street Journal, a court-appointed bankruptcy monitor for QuadrigaCX recently released a report detailing the failing company’s financial information. The report claims that before his death, company founder Gerald Cotten had shifted “significant volumes” of currency to his own personal accounts on various other exchanges before reportedly passing away.

    The monitor's report claims that about 76,000 customers are owed more than CAD 215 million (roughly $163 million US). Investigators in the case have only recovered $33 million. At least some of the transferred funds were liquidated and used to buy real estate, luxury items, and vacations including travel via private jet service.

    The Verge noted that Cotten’s wife Jennifer Robertson claimed about $190 million was held in a cold wallet, but only her husband had the password. However, the monitor contradicts her claim saying, “User Cryptocurrency was not maintained exclusively in Quadriga’s hot and cold wallets. Significant volumes of Cryptocurrency were transferred off Platform outside Quadriga to competitor exchanges into personal accounts controlled by Mr. Cotten.”

    While some of the funds in these off-platform accounts were eventually transferred back to QuadrigaCX exchange accounts, at least $80 million was liquidated over three years and these funds cannot be found.

    According to India’s The Economic Times (TET), some believe Cotten may have faked his death. He allegedly died shortly after marrying Robertson and changing his will to leave nearly everything to her. Cotten was only 30-years-old, and according to QuadrigaCX’s official statement, he died from complications related to Crohn’s disease.

    Skeptics say that co-founder Michael Patryn is the alias of Omar Dhanari who was convicted on charges of identity theft. Dhanari ran a website called ShadowCrew, which trafficked in stolen bank and credit card numbers. He was sentenced to 18 months in a US federal prison. None of this was disclosed to investors. Patryn denies the claims and says he had nothing to do with ShadowCrew.

    Cotten’s wife has also used multiple aliases. According to TET, in May 2016 she bought real estate under the name Jennifer Forgeron. Shortly after the purchase, she changed her name to Griffith, then to Robertson in December of the same year.

    The monitor’s report does not address the possibility of Cotten faking his death but does point out enough financial misconduct to indicate that motive existed. QuadrigaCX has very few business records. In fact, the monitor could find no evidence that the company had kept any “traditional books” since 2016.

    It is unclear where the investigations will go from here, but it seems that there is a lot more to this story. So far nobody has been charged with a crime.

    Permalink to story.

  2. Uncle Al

    Uncle Al TS Evangelist Posts: 5,400   +3,793

    And you can only imagine what is going to happen when Fakebook launches it's currency ........
    Dimitrios likes this.
  3. antiproduct

    antiproduct TS Addict Posts: 115   +127

    Did they use Initech to make their programs?
  4. Liljonny11

    Liljonny11 TS Rookie

    I guess people still have not learned yet. If you entrust an exchange to handle your cryptocurrency information, you are literally defeating the point of it. The point it to decentralize currency, therefore removing the banks from the equation. You know? The people with the ability to move your money around without permission. If you give your hashkey to your crypto currency wallet, like in BitCoin, and give it to someone to handle. You are literally leaving the the security of your money up to the faith in that bank/exchange and it's security. In other words good luck. Nothing is wrong with cryptocurrency, it's just the people using it.
    Peter Farkas and Eldritch like this.
  5. Squid Surprise

    Squid Surprise TS Evangelist Posts: 2,551   +1,545

    This really has nothing to do with the viability or non-viability of cryptocurrency....just the dishonesty of a CEO (and possibly his wife and associates)... this could easily have happened (and probably has) with the CEO of any “normal” company...
    Peter Farkas likes this.
  6. ET3D

    ET3D TechSpot Paladin Posts: 1,657   +320

    It would really do crypto some good. Well, at least when Facebook launches it, I'm pretty sure the Fakebook currency won't be that safe.

    Really, that would finally make crypto legit, not something that involves passing it through all sorts of 'financial institutions' managed by frauds. Hopefully mining won't be involved, either.
  7. fps4ever

    fps4ever TS Evangelist Posts: 305   +301

    Just another day in crypto currency land...No.1 in the corruption and criminal market.
  8. Dimitrios

    Dimitrios TS Guru Posts: 470   +351

    Sadly you will see the same people bragging on FACEBOOK live stream how rich and successful they are from FakeBook bit coin then a week later them losing all their money and committing suicide on live stream.
  9. Liljonny11

    Liljonny11 TS Rookie

    Fair, although, this could have been easily avoided with public knowledge of how BlockChain technology works, without corporations and news sites spewing buzzwords like "brand new currency" and "scams", like the tech behind it, isn't already something that's been around it for a while and is somehow the cause of these issues. I was more responding to comments that always show up saying cryptocurrency is a sham and all about corruption when it's supposed to be about literally the opposite.
  10. Nobina

    Nobina TS Evangelist Posts: 1,947   +1,492

    Nothing bad about that.
  11. Squid Surprise

    Squid Surprise TS Evangelist Posts: 2,551   +1,545

    Very true - however, almost all scammers rely on the public being pretty dumb... and they're often correct...

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