What we know about the Quadriga story so far

05 Feb, 2019 | Updated: 06 Feb, 2019
by Richard Allen
News
What we know about the Quadriga story so far

The story of what’s happened Canadian cryptocurrency exchange QuadrigaCX almost sounds like a work of fiction, and while the details of the story are still unfolding, here is an overview of what we know about Quadriga so far.

Read more: Who is Gerald Cotten, the allegedly dead co-founder and CEO of Quadriga CX?

How it began

“It is with a heavy heart that we announce the sudden passing of Gerald Cotten, co-founder and CEO of QuadrigaCX. A visionary leader who transformed the lives of those around him, Gerry died due to complications with Crohn’s disease on December 9, 2018, while traveling in India, where he was opening an orphanage to provide a home and safe refuge for children in need.”

Read more: 5 conclusions of the QuadrigaCX hearing

No one is quite sure when Jennifer Robertson, Gerald Cotton’s Estate Executor made the above statement, but the consensus is that it was around January 14, 2019, since that’s when it was tweeted by Quadriga’s official Twitter account.

WATCH: QuadrigaCX Conspiracies - What is REALLY going on?! Subscribe to the Chepicap YouTube Channel for more videos!

Read more: Canadian crypto exchange QuadrigaCX owes $190 million to customers

The trouble begins

Then, Canada’s largest crypto exchange suddenly went offline due to unannounced system maintenance upgrades, according to a statement on the website. Sometime later, Robertson signed an affidavit in support of consumer protection. An excerpt of the affidavit reads:

“After Gerry’s death, Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost.”

According to her, Cotton was the custodian of 26,500 Bitcoin, 11,000 Bitcoin Cash, 11,000 Bitcoin Cash SV, 25,000 Bitcoin Gold, around 430,000 ETH, and roughly 200,000 Litecoin. Some may have been kept on exchanges but at this point, it’s unclear where the private keys are.

Additionally, Cotton, who was the sole director and officer of Quadriga, was running the exchange on his encrypted laptop which no one seems to have the password to.

The story also features an encrypted USB. Apparently, an expert has been trying to gain access to both the USB and the laptop but has thus far been unsuccessful. However, perhaps as a failsafe, they said that there was an automatic method for the hot wallet to be topped up.

While the details of how this works remain unclear, Aaron Matthews, Head of Operations at Quadriga stated around January 17 that, “Hot wallets are consistently being refilled, there has been a higher demand for crypto that has caused these delays. They are going out in sequence and we are working on improving these timelines.”

The obvious question at this point is how could they top up the hot wallets without the private keys?

Read more: Changpeng Zhao, about QuadrigaCX: never have CEO carry private keys

The conspiracy

And that brings us to what many have been wondering, was this an elaborate exit scam? Before you roll your eyes, there may be some truth to this. The exchange had been facing fiat withdrawal issues since October last year as reports indicate that Canadian banks were refusing to provide their services to the exchange. As such, they had to rely on payment processors until seemingly, one bank suddenly froze a large portion of the exchange’s funds. This led to legal battles that apparently Cotton subsidized from his own pocket.

There was no indication of this in the statement. In fact, it was quite the opposite. The statement reassured customers that improvements were coming to the site and services, suggesting Aaron Matthews would “continue what Gerry started.”

All would have remained peaceful if it weren’t for a customer complaining on January 16 that his Bitcoin withdrawal had been pending for 24 hours. Quadriga responded with a tweet saying:

Fast forward to January 31st. After many more complaints, Quadriga’s site goes blank with a message confirming bankruptcy proceedings had begun.

Kraken’s CEO Jesse Powell then tweeted:

Additionally, a further tweet by Ryan Kneer suggests that Powell has been combing through Quadriga’s transaction data and a full report of Quadriga's “malfeasance” should be published soon. Perhaps it will shed some light and provide much-needed answers to the bizarre tale.

Read more: QuadrigaCX debacle: Truth or exit scam?; the community responds

Update February 5 - Fake person?
The latest news coming from the QuadrigaCX saga is the latest finding that Quadriga Co-founder Michael Patryn is in fact another person entirely. Reports claim that Patryn is in fact convicted criminal Omar Dhanani who has previously been convicted of fraud, for his role in operating an online marketplace for identity theft. He was released in 2007.

The findings are starting to create new conspiracy theories surrounding the entire story. Was CEO Gerald Cotton murdered? Has he performed the perfect exit scam? Is there more to this story than everyone is being led on to believe? With so much up in the air at the moment, it is hard to differentiate between facts and fiction at this point. However, something definitely smells fishy.

In the meantime, a brand new petition is appealing to the co-founder and CEO of Kraken, Jesse Powell, to buy out QuadrigaCX.

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Add a comment

I have started my recovery process and I have gotten half of my funds back. Glad Ive started the process anyone else whose invested in this broker should do the same. mayabanin01atgmaildotcom
05 Feb, 2019 - 20:45
How did you start the recovery process? I too fell victim to the “lost” password conspiracy.
12 Feb, 2019 - 04:09

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