QuadrigaCX’s sordid saga continues – Cold wallets cleaned out April 2018

Craig Wright – Satoshi Nakamoto imposter or not – Judge not impressed

QuadrigaCX, the crypto storyline that keeps on giving, took another bizarre twist, as investigators determined that Gerry Cotten, the CEO of the exchange, had cleaned out the cold storage account balances as far back as April 2018, presumably transferring them to QuadrigaCX accounts at other exchanges. Ernst & Young reported these finding to the court, which granted another 45-day extension of bankruptcy protection in order to find the missing funds. The amounts in question were C$190m ($140m, £110m).

More information just keeps coming in, as the court, Ernst & Young, and quite a few other concerned entities in the crypto community attempt to create a plausible narrative, based upon verifiable evidence. It has also come to light that QuadrigaCX, the largest crypto exchange in Canada, may also have had a questionable past, possibly dealing with a few shady characters. Local Canadian banks have been reticent to deal with the exchange, citing money-laundering concerns. As for Gerry Cotten, he employed the unusual practice of being the only one with access to the passwords for opening the exchange’s cold wallet system.

The story, as we know it today, began with Cotten moving cold storage tokens to other exchanges back in April. He got married in December, cleaned out the remaining small balance in the last of six wallets that had been used for transactional purposes, wrote a will, and then traveled to India. Some reports say it was his honeymoon, others say he was setting up an orphanage, but in any event, he died in an Indian hospital bed of complications from Crohn’s disease. Skeptics still want an official autopsy of the body.

The passwords died with Mr. Cotten, or so the story goes. Ernst & Young has been able to gain access to his laptop and has validated that the account balances in Quadriga’s cold storage accounts are zero. ZeroNonCense, a crypto research and consulting platform, performed their own analysis of the blockchain and produced a report hinting that “there is a very strong possibility” that nearly 650,000 ETH belonging to QuadrigaCX were stored on the Kraken, Bitfinex and Poloniex crypto exchanges.

ZeroNonCense explained that:

Given the affidavit of the founder’s widow Jennifer Robertson that neither she nor other individuals involved with the exchange knew where Cotten stored the crypto assets, it is possible that they were not aware of these storage practices.” Their report also concluded that: “If QuadrigaCX’s funds are still on the aforementioned exchanges, their retrieval should be trivial and could allow the platform to regain solvency and resume its operations.

Conspiracy theories, however, continue to swirl about, due in part to Ms. Robertson’s unexplained delay of waiting over a month before informing anyone of her new husband’s death. The news of shady business dealings only adds fuel to this fire. Customers have expressed skepticism, believing that Cotten is not only alive and well, but also living the good life on some distant exotic shore. Each new revelation only emboldens their take on the facts. One disgruntled customer has even gone so far as to post a $100,000 reward for anyone that can locate the lost cryptocurrency funds.

Ernst & Young also revealed that it had discovered 14 suspicious trading accounts on the QuadrigaCX platform, which had a trail of transfers and withdrawals to non-QuadrigaCX addresses. The audit firm is in the process of analyzing these transaction histories, which means that more details may soon surface in the near-term. This made for Hollywood screenplay just keeps getting stranger with each twist and turn.

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