QuadrigaCX a Year On – What Has 2020 Taught Us?

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  • The QuadrigaCX scandal was one of the biggest stories in crypto last year
  • The mystery surrounding CEO Gerald Cotten’s death was featured in mainstream media outlets worldwide in 2019
  • What has 2020 taught us about the case, and have any of the key questions been answered?

The QuadrigaCX scandal hit the headlines in both the cryptocurrency and mainstream news outlets last year, with new revelations breaking on an almost weekly basis. A year on, what more do we know about the exchange’s collapse, the founder’s suspicious death, and the likelihood of former customers getting their money back?

EY Takes Control of Remaining Funds

By the time that 2019 rolled over to 2020, we knew, or suspected, a fair bit about the QuadrigaCX scandal. The focus of 2020 was always going to be about starting to repair the damage and hopefully tie up the major parts of the case into a conclusion of sorts, which started when EY shipped the remaining cryptocurrency in the QuadrigaCX accounts over to their own custody in February. This haul consisted of 51 BTC, 951 ETH, 33 BCH, 2,000 BTG, and 822 LTC, with more than CAD$30 million ($22 million) held by payment providers who seized the money in early 2018.

This brought the total asset value to $22.7 million at today’s prices, which may seem like a healthy amount, but when it was revealed in May that 16,959 proofs of claims amounting to a total $307 million had been received by EY, the scale of the problem became clear.

QuadrigaCX Operated Like a “Revolving Door”

As well as knowing for sure how much money is now at stake, we also know for sure just how much of a farce the QuadrigaCX operation became in 2018. An Ontario Securities Commission report highlighting Cotten’s slipshod business practices and how the cryptocurrency exchange turned into a Ponzi scheme just to stay alive. The report found that by the end of 2018 the exchange “had almost no assets left” and was operating like a “revolving door”, with new deposits going to pay off withdrawals almost immediately.

We know then that QuadrigaCX ended up being in a huge financial hole by the end of 2018, with hundreds of millions in cryptocurrencies steadily leaving the company’s wallets over time, with Cotten’s death occurring right at the end of December that year, famously without passing on the access codes to the company’s cryptocurrency wallets.

Doubts Remain Over Cotten’s Death

Doubts remain over Cotten’s death, with the legitimacy of his death certificate and the actions of his widow Jennifer Robertson coming under scrutiny. It doesn’t take Sherlock Holmes to put the pieces together and suggest that Cotten saw the writing on the wall and stole the crypto from the QuadrigaCX accounts, faked his death, and is living under a new identity on his ill-gotten gains.

Former customers may end up getting something back after the lawyers and accountants have taken their cut, but it will be a fraction of what they had on the exchange, and many will suspect that Gerald Cotten is enjoying their money much more than they are.

2020 may have got us closer to resolving the more technical aspects of the QuadrigaCX case, but the key questions remain unanswered, and, unless Cotten emerges to answer them, doubts will forever remain.