In brief: A recent report indicates that the founder of a Canadian cryptocurrency exchange funneled investor money into several personal accounts before allegedly dying last year. Some think he may have faked his death as part of a scam.
According to The Wall Street Journal, a court-appointed bankruptcy monitor for QuadrigaCX recently released a report detailing the failing company's financial information. The report claims that before his death, company founder Gerald Cotten had shifted "significant volumes" of currency to his own personal accounts on various other exchanges before reportedly passing away.
The monitor's report claims that about 76,000 customers are owed more than CAD 215 million (roughly $163 million US). Investigators in the case have only recovered $33 million. At least some of the transferred funds were liquidated and used to buy real estate, luxury items, and vacations including travel via private jet service.
The Verge noted that Cotten's wife Jennifer Robertson claimed about $190 million was held in a cold wallet, but only her husband had the password. However, the monitor contradicts her claim saying, "User Cryptocurrency was not maintained exclusively in Quadriga's hot and cold wallets. Significant volumes of Cryptocurrency were transferred off Platform outside Quadriga to competitor exchanges into personal accounts controlled by Mr. Cotten."
While some of the funds in these off-platform accounts were eventually transferred back to QuadrigaCX exchange accounts, at least $80 million was liquidated over three years and these funds cannot be found.
According to India's The Economic Times (TET), some believe Cotten may have faked his death. He allegedly died shortly after marrying Robertson and changing his will to leave nearly everything to her. Cotten was only 30-years-old, and according to QuadrigaCX's official statement, he died from complications related to Crohn's disease.
Skeptics say that co-founder Michael Patryn is the alias of Omar Dhanari who was convicted on charges of identity theft. Dhanari ran a website called ShadowCrew, which trafficked in stolen bank and credit card numbers. He was sentenced to 18 months in a US federal prison. None of this was disclosed to investors. Patryn denies the claims and says he had nothing to do with ShadowCrew.
Cotten's wife has also used multiple aliases. According to TET, in May 2016 she bought real estate under the name Jennifer Forgeron. Shortly after the purchase, she changed her name to Griffith, then to Robertson in December of the same year.
The monitor's report does not address the possibility of Cotten faking his death but does point out enough financial misconduct to indicate that motive existed. QuadrigaCX has very few business records. In fact, the monitor could find no evidence that the company had kept any "traditional books" since 2016.
It is unclear where the investigations will go from here, but it seems that there is a lot more to this story. So far nobody has been charged with a crime.