- QuadrigaCX victim believes founder Gerald Cotton is still alive and has access to the ‘lost’ private keys.
- The exchange was “robbing Peter to pay Paul” for months due to a lack of liquid funds.
- It is “extremely apparent we were lied to” given that funds were moving out of the supposedly inaccessible wallets.
The QuadrigaCX mystery has gripped crypto and indeed mainstream media for the last week. The line given by the estate is that founder Gerald Cotton died in India in December and left no way of accessing the funds on the exchange, but news of a recently changed will, coins moving out of supposedly unreachable wallets, and doubts over the legitimacy of the death certificate have turned this into something that only Sherlock Holmes could get to the bottom of.
Amid all the mystery however are the some 100,000 customers who have become unwitting victims of this strange turn of events, malicious or otherwise. One of our writers, Mark Hunter, spoke to a QuadrigaCX victim, Reddit user Charles005, to get a first-hand account of his experiences with the exchange and how it has shaped his current thoughts on the situation.
MH: How long have you been a QuadrigaCX customer?
CH: I have been a QuadrigaCX Customer since November 2016.
MH: How much did/do you have on the exchange?
CH: At one point I did have CAD 30,000 on the exchange. At point of shutdown I only had 12 Ethereum on the exchange, which was recently purchased.
MH: How would you sum up their service until December 2018?
CH: My overall service from November 2016-December 2018 was generally great. I never had an issue with anything and the most I had to wait for a wire transfer to complete was 7 days.
MH: When did you first notice something was wrong and what was that?
CH: I first noticed something was really wrong when I purchased my 12 Ethereum. It wasn’t until after that purchase when I tried to withdraw to my personal wallet that I noticed the withdrawal was stuck on processing for multiple days. At that point I knew something was up.
MH: How did your fears/concerns change between the time of these initial concerns and the ‘official’ announcement of Gerald Cotton’s death?
CH: I was actually unaware Gerald Cotton had died on December 9th when I had made my purchase in January. If I was aware of this I probably would’ve chosen another solution for purchasing.
MH: Are you aware of the report by Zerononcense that alleges QuadrigaCX was using other customers’ funds to pay for withdrawal requests? What do you make of those allegations?
CH: I am now aware of the report, yes, and with Quadriga’s financial troubles piling up it does make sense that this is how they operated for the remaining months. Robbing Peter to pay Paul type of scenario. I think they’re more than just allegations, which will come out as we get more of a view of their troubled finances.
MH: Zerononcense also alleges that QuadrigaCX in fact has access to their Bitcoin holdings when it says it has lost them – what do you make of those allegations?
CH: It is apparent they have access to their Litecoin cold wallet, so I do believe that they still have access to their Bitcoin and Ethereum wallets despite claims that they’re lost. Solely because they went from saying they had no access to any of the keys and when their LTC wallet was found it became extremely apparent we were lied to as funds were moving out of that address.
MH: Who do you blame for the current crisis?
CH: I place blame on every employee of Quadriga and not solely Mr Cotton. I say this because at any time they could have expressed their concern that Mr Cotton was the sole holder of the keys. It is extremely irresponsible of a company to operate with such a single point of failure that could result in thousands of Canadians losing funds.
MH: What is your opinion of the theories that Gerald Cotton has not died and that this is an elaborate exit scam?
CH: I personally believe Gerald is still alive. It’s quite a convenient that he apparently passed in a country that specializes in fake death certificates. With his new found wealth it’s not a far stretch to believe someone can fake their death and also forge a new identity for anything under a million dollars. That would still leave him, his fiance, and his beloved dogs at least CAD 189 million. I believe he encrypted his laptop well enough that no security expert will be able to breach it and that he is already in possession of the private keys, wherever he may be.
MH: What would convince you that the official line is true?
CH: It’s hard to say what would convince me that he was truly dead. I’m not such a morbid person I would ask for photos of the body, but I would expect perhaps India’s Government cooperation with Canadian law enforcement to at least fact check the details surrounding his death. From my understanding, his “body” is probably already cremated which would entirely remove the standards for identifying an individual through DNA/fingerprinting. Hopefully the Indian Government can provide more information to this.
MH: What do you think this says about the relationship between crypto exchanges and customers?
CH: The relationship between exchanges and people is always uneasy. We’ve seen too many Mt. Gox situations come and go. We need to start using and making decentralized exchanges the norm. However, it is difficult to get the fiat on/off ramps with decentralized exchanges. Until that comes there will always be an uneasy feeling for people using exchanges.
MH: What can crypto learn from this situation?
CH: This is a tough one because I would normally cite the “if you don’t own the private keys, you don’t own the Crypto” phrase, but because a lot of us on Quadriga who still live by that rule were essentially trapped into holding our fiat/crypto on the exchange for the last month it makes that statement irrelevant. Everyone could live by that practice and we could still get screwed by the exchange itself by not processing withdrawals.For now, I would hope that more and more people start using decentralized exchanges, and if you do have to use a centralized one to add more fiat, remove it as soon as possible to a wallet that’s controlled by you and only you.
A Wallet Worth Watching…
QuadrigaCX has 30 days to access the missing funds before lawsuits can be filed by creditors. No doubt the crypto world will be watching their cold wallet addresses with great interest as the weeks and months go by.