Quadriga Fintech Solutions is the owner and operator of QuadrigaCX, which, until 2019, was believed to be Canada’s largest cryptocurrency exchange. The company’s CEO and founder, Gerald Cotten, died unexpectedly in December 2018, after travelling to India.
250 Million Missing
Around C$250 million (US$190 million) owed to 115,000 customers are missing or cannot be accessed because only Cotten held the password to off-line cold wallets.
Ernst & Young has been appointed as an independent monitor while Quadriga has been granted temporary legal protection from its creditors under the Companies’ Creditors Arrangement Act, a form of bankruptcy. The Royal Canadian Mounted Police (RCMP) and the U.S. Federal Bureau of Investigation (FBI) are reportedly investigating the company.
“Before his death made headlines worldwide, Gerald Cotten had just been a 30-year-old guy working in digital finance. And when Cotten, the founder of QuadrigaCX, which now owes more than $260 million in cash and cryptocurrency to thousands of people, first turned his focus to Bitcoin, he found there weren’t many ways to buy the cryptocurrency in Canada,” an article in the Financial Post said.
The popularity of Quadriga’s cryptocurrency exchange is now a burden on the company, which has been forced into creditor protection in the wake of Cotten’s death in India in December, the article added.
According to court documents, there are 92,000 or so users to which Quadriga owes more than $260 million in cash and cryptocurrency.
The report also mentioned that Cotten had been responsible for handling funds for Quadriga, and the CEO left behind a password-protected laptop and USB key that no one has been able to crack. The situation has raised a lot of questions, including about Cotten himself.
Christine Duhaime, a Canadian lawyer and certified financial crime and anti-money-laundering specialist, worked with Quadriga in 2015 as the company was trying to launch Canada’s first research and development lab for the blockchain.
There have been many views about Cotton’s death including that this could be a giant exit scam and that he could have possibly faked his death. It didn’t also help that his will had been filed 12 days before his death and listed his assets including an aeroplane, a Lexus and a boat. It also contained a provision for his two pet Chihuahuas.
In the early parts of this decade, Cotten was living in Vancouver, where Quadriga was based. He also moved in a circle of people interested in Bitcoin and blockchain, the technology that supports the digital currency.
It was the place to be for cryptocurrency enthusiasts. Hippies had Haight-Ashbury, the Beats had Greenwich Village, and Bitcoin lovers had Vancouver.
In 2013, the world’s first Bitcoin ATM opened in the city. But even before that, a group of people had had regular meetups in Vancouver to talk Bitcoin and otherwise. The gatherings allowed people to talk about Bitcoin, learn about digital coins and how to get more businesses using it.
“The Quadriga situation is quite shocking,” Emin Gun Sirer, associate professor of Computer Science at Cornell University told a media organisation. “What’s even more surprising is the exchange’s inability to locate their funds on the blockchain.”
Cotton death has led to millions of dollars being ‘frozen’, and netizens are now concerned that this could happen again giving the world of cryptocurrency a status of being an unsafe place for investments.