Canada Exchange Update: $190M Gone, Mysterious Death, Exit Scam Fears Grow

Canada Exchange Update: $190M Gone, Mysterious Death, Exit Scam Fears Grow

TL;DR: Shortly after CoinSpice reported on Canada cryptocurrency exchange QuadrigaCX’s sudden filing for creditor protection and going offline, new evidence appears to show the equally sudden death in India of its CEO and founder raises more questions than it answers. With exchange cold storage private keys evidently disappearing along with the supposed passing of the CEO and $190 million, new fears are growing within the community of an elaborate exit scam. 

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Canada Crypto Exchange Ghosts: $190M Gone, Mysterious CEO Death in India

Always outspoken founder of US crypto exchange Kraken, Jesse Powell, revealed, “We have thousands of wallet addresses known to belong to @QuadrigaCoinEx and are investigating the bizarre and, frankly, unbelievable story of the founder’s death and lost keys. I’m not normally calling for subpoenas but if @rcmpgrcpolice are looking in to this, contact @krakenfx.”

The entire affair appears to be yet another lesson in the truism: not your keys, not your crypto. Various reports are now insisting nearly $200 million has gone missing from the exchange due to remaining staff being unable to access the exchange’s cold storage wallets. The keys to them were entrusted to exactly one person: founder and CEO of QuadrigaCX, Gerald Cotten.

Canada Exchange Update: $190M Gone, Mysterious Death, Exit Scam Fears Grow

Cotten, according to his widow, died in India from Crohn’s disease complications. He was 30 years old, and in the process of philanthropy involving an Indian orphanage. Rumors through various chat groups claimed the body was not repatriated intact, and was instead cremated in Jaipur, India. EDIT: CoinSpice has been unable to independently confirm that claim.

In fact, an earlier Reddit post from nearly 3 weeks ago contained back-and-forth from someone apparently close to the family. In response to questions about where Cotten’s body is, an account only 2 weeks old responded, “His body is where he was laid to rest just mere days after he was brought back to Canada you insensitive jerk. Funeral arrangements were kept private and everything remained private for my family. He died on his god damn honeymoon. He and his wife sponsored an orphanage in India and were visiting which is when he passed away from his horrible disease. My family would only dream that this was all fake. But the reality is… that it isn’t. And we have suffered a tragic loss and all you care about is tearing it apart and being entirely disrespectful.” CoinSpice attempts to search government documents regarding Cotten’s death proved fruitless.

Fake Names?

One alleged victim posted to social media about having “$10,000 personally stolen in this exit scam disguised as the greatest movie script of all time,” wondering aloud at the stunning coincidence a 30 year old man “finalizes his will 2 weeks before his death in India while building an orphanage and goes to his grave with the keys to $200 million in crypto…,” stoking well-earned paranoia within the ecosystem.

Canada Exchange Update: $190M Gone, Mysterious Death, Exit Scam Fears Grow
Cotten back in 2014

The commenter was paraphrasing a Globe & Mail paragraph that reads, “Mr. Cotten was diligent in other areas of his life. He signed a will on Nov. 27, less than two weeks before he died. He appointed [his eventual widow] as the executor of his estate and outlined the distribution of his assets, including an airplane, property in British Columbia and Nova Scotia, and two pet chihuahuas named Nitro and Gully, along with $100,000 for their care.”

Reddit page dedicated to the exchange then carried a post worrying about employees using false names. “QuadrigaCX founders and their fake names? QuadrigaCX was founded (and still controlled?) by two other people: Michael Patryn, Lovie Horner. There have been many rumours about these two people and the consensus is that they are fake names or new legal names that they acquired.” No definitive proof of the claim has been presented.

Litecoin Being Moved?

Yet another post alleges, “QuadrigaCX litecoin cold wallet address found and funds are being moved out. This post identifies the litecoin cold wallets that Quadriga uses. Funds are being moved out… this means that the private keys are in fact not ‘lost’ and we’re being played. Gerald or someone else with the private keys are literally moving our money out as we speak,” and links to timestamped movements of four wallets were provided.

Canada Exchange Update: $190M Gone, Mysterious Death, Exit Scam Fears Grow

100,000 plus users are owed a quarter billion Canadian dollars in total. The exchange had 429,966 ether, 199,888 litecoin, and 26,488 in bitcoin core (along with bitcoin cash, BSV, bitcoin gold). The CEO’s window has reportedly solicited a security firm’s help to obtain access to the cold wallets entrusted to her late husband.

While all these tidbits still do not add up to anyone faking anything, names or death, perhaps developer Amaury Séchet put the broader community’s feelings best: “If @QuadrigaCoinEx’s story is correct, they should publish the addresses of their cold storage. Over time trust will build as the coins remains untouched. If they cannot do this, their story is not credible, and it is an exit scam.”

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