The bizarre story of QuadrigaCX reveals why you are a complete fool to trust any crypto exchange
04/03/2019 / By Ethan Huff
In case you missed it, a major Canadian cryptocurrency exchange went belly-up earlier this year after its CEO was reported to have “died,” supposedly taking with him “to the grave” nearly $200 million worth of other people’s crypto assets.
QuadrigaCX, as the exchange was once called, had, at one point, been the largest crypto exchange in Canada. In fact, reports indicate that QuadrigaCX was on track to become “the most transparent and secure exchange in Canada” – that is, until it suddenly and abruptly wasn’t at all what it appeared to be.
Christine Duhaime, a former lawyer for the now-defunct QuadrigaCX, recently came forward publicly as a type of whistleblower, revealing all that she knows and is allowed to say about what transpired at the company, especially during its final days.
When QuadrigaCX was first launched, she says, everything appeared to be above-board in terms of how the company did business. It had four different law firms advising it in the beginning, and company CEO, Gerald Cotten, supposedly now-deceased, had even hired on a separate auditor and secured additional insurance for cold-storage deposits.
But everything changed in an instant when Cotten suddenly went rogue, eliminating all of the checks and balances that had previously been in place at QuadrigaCX, and doing things his own way, according to Duhaime’s account of events.
“On that day, he terminated the professionals that were, in his mind, ‘law and order’ folks – the accountant, the auditor and me, the regulatory attorney,” Duhaime wrote in a recent essay for CoinDesk.com.
You can read Duhaime’s full essay at this link.
While Duhaime says she doesn’t know why Cotten suddenly decided to “eschew regulatory law,” she has admitted that QuadrigaCX was broken up in to three separate companies just “a few months before her firm was brought on.”
This separation allowed the company “to take on a raft of new shareholders, many of whom hadn’t been vetted,” she claims.
The reason why this is important is that Duhaime suspects, but cannot say for sure, that the company had, around this time, devolved into a “Vancouver pump-and-dump scheme” – meaning it basically transformed into a total scam operation whose owners were intent upon basically stealing trusting people’s crypto assets.
It would appear as though they were successful in doing this, as hundreds of millions of dollars’ worth of crypto has now gone missing, with no likely or probable way to retrieve any of it.
According to reports, former QuadrigaCX customers have been impacted “to varying degrees.” One Canadian man, a software engineer, reportedly lost his entire life savings with Cotten disappeared. Another lost a whopping $75,000 as a result of “one ill-timed trade.”
“Like everyone else, there are a lot of other things I don’t know about QuadrigaCX,” Duhaime adds in her essay.
“I don’t know if there is $137 million parked in a few wallets; I don’t know why the bitcoin addresses that were supposed to be holding $92.3 million turned up empty; I don’t know why the wallet address holding $44.7 million of other cryptos can’t be disclosed; I don’t know why no law firm has applied for a Mareva injunction to preserve assets; I don’t know why the litigation is in Nova Scotia when British Columbia Courts have jurisdiction and the witnesses and evidence are in British Columbia; I don’t know why there are statements that there are no records; and I don’t know why the shareholders haven’t tokenized the exchange and made it operational so that customers can start to recover some of their assets.”
Be sure to read Duhaime’s full essay on what happened to QuadrigaCX at CoinDesk.com.
For more cryptocurrency-related news, visit BitRaped.com.
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Tagged Under: bitcoin, Canada, crime, crypto, crypto assets, crypto exchange, cryptocurrency, deception, exchange, finance, Gerald Cotten, market collapse, QuadrigaCX, risk, stupid, theft