- QuadrigaCX founder Gerald Cotten traded with user funds, according to trustee EY
- As a result of Cotten’s losses, there is a $141 million shortfall in claimed ownership and actual funds left
- Customers may have had as little as 17% of their money left at the time the platform collapsed
The trustee for the QuadrigaCX exchange has revealed a $141 million shortfall between customer claims and remaining funds. In the latest update on the status of the collapsed exchange, EY stated that they had received claims totaling $171 million while the amount of money available to creditors is only $29.8 million. The reason for the discrepancy is likely to have been the fact that now deceased founder Gerald Cotten traded with customer funds, losing millions in the process.
QuadrigaCX an Enduring Crypto Mystery
The case of QuadrigaCX and its founder Gerald Cotten is one of the strangest mysteries in a cryptocurrency space that has mystery at its very core. Cotten founded QuadrigaCX in 2013 alongside Michael Patryn, with the Canadian exchange becoming incredibly popular as the cryptocurrency ecosystem exploded.
Cotten was clearly overwhelmed with the demands of running QuadrigaCX and began to indulge in all manner of poor and eventually illegal business practices, ending with the exchange having no liquidity by 2018, despite customers still having positive balances on the site, and unable to honor withdrawals.
Cotten Traded With Customers’ Money
Part of the mismanagement has been laid bare in the latest EY report, which states that Cotten created accounts on his own exchange and credited them with balances, despite there being no actual money added to the accounts.
He then “proceeded to trade these account balances with Affected Users that had deposited real assets”, losing millions of dollars in the process. As a result, while claimants have been submitting claims based on their purported holdings, their actual holdings could be as little as 17% of those amounts.
This situation is even more egregious given that six cold wallets belonging to QuadrigaCX were emptied of all their funds in 2018 and their destinations never identified, meaning that someone somewhere has these users’ funds. Many suspect that this individual is Cotten himself, who has faked his death and is biding his time before cashing out his ill-gotten gains.