Coinbase CEO Brian Armstrong has opened up on his thoughts on the QuadrigaCX situation. In a tweet-thread posted Thursday, which he prefaced by stating that his assumptions were “pure speculation”, Armstrong claimed that the company was already in financial trouble and that the “untimely death of their [QuadrigaCX’s] CEO was used as an outlet to let the company sink”. He stops short of claiming that the former CEO has faked his death, which is a claim made by some long-term users, and says that an exit scam “likely would have been timed better”.
Wanted to share a summary of what we believe happened to QuadrigaCX. We did our own internal research, including some blockchain analytics, to see if we could help. Important to note that this is just our best guess. Take it as *pure speculation*, nothing more.
— Brian Armstrong (@brian_armstrong) February 21, 2019
Did QuadrigaCX Use Cotten’s Death to Bury Financial Woes?
Armstrong says in his tweet-thread that his team conducted their own research using blockchain analytics and discovered that after a bug in 2017 cost them millions of dollars, they began moving funds from the exchange’s ‘hot wallets’, which is where users’ deposits go and withdrawals come from, to the cold storage that is now inaccessible. This continued until early 2018 when, according to Armstrong, the rip cord would likely have been pulled on any exit scam as the crypto market was showing signs that it had topped out. Instead, Armstrong suggests, Quadriga experienced liquidity issues and a growing number of user complaints, as well as having bank accounts frozen. The 2018 bear market left them in a terminal financial position, he says, and they used Gerald Cotten’s death as a way to absolve themselves of their problems. Armstrong finished his thread by stating that “While this story isn’t perfect, it does seem plausible.”
EY Takes Hold of QuadrigaCX’s Funds
Court-appointed monitor EY announced in their second report Thursday that it has taken possession of QuadrigaCX’s remaining funds, consisting of 51 BTC, 951 ETH, 33 BTC, 2,000 BTG and 822 LTC, which EY will keep in cold storage pending further instructions from the court. The report also mentions the unintentional transfer of 103 BTC into one of the inaccessible cold wallets that happened last week, stating that this was an automated transfer prompted by a “platform setting error” and was not the work of an individual, which should, but probably won’t, silence conspiracy theorists who claimed this was part of an elaborate exit scam.