The Bitcoin exchange QuadrigaCX is said to have systematically ripped off its customers. According to court documents, the platform operator Gerry Cotten has deducted numerous funds for his own purposes. Where a large part of the funds are, remains unclear.
The guesswork surrounding the insolvent Bitcoin exchange QuadrigaCX and the customer assets that have disappeared there is coming to an end. Gerry Cotten, the founder of the Canadian trading platform who died in early 2019, is said to have stolen a significant portion of the funds for his own purposes. For this he resorted to fake customer accounts. The explosive information comes from a court report of 19 June.
uadrigaCX had already declared insolvency in February this year. The bankruptcy announcement was preceded by the demise Cottens. According to current knowledge Cotten is the only one to have the passwords for the Cold Wallet of the Bitcoin exchange. However, this secret and thus the only access to the assets of QuadrigaCX he took to the grave. In the following, it was not long before doubts arose about such an account of events. The existence of the Cold Walletwas increasingly being questioned. Operation QuadrigaCX a giant pyramid scheme? Had Cotten even faked his death? The report now provides a preliminary answer to some of these questions. Whether Gerry Cotten will return from the dead, the report leaves open.
QuadrigaCX had serious organizational shortcomings
According to the report, Cotten had a tremendous amount of control over the activities of the Bitcoin exchange. Even more conspicuous: the investigations could not establish a separation between client assets and stock-market reserves. The type of management had significant shortcomings “from the point of view of financial reporting and operational controlling.” However, these shortcomings were not without reason. Finally, Cotten is said to have transferred customer funds from the QaudrigaCX account to its own. With these funds, which were kept at other crypto exchanges, Cotten then tries as a trader. Apparently with little success. The report attests here negative consequences for the own enterprise: "trade losses and additional fees, which were raised by the stock exchanges,
Cotten used fake QuadrigaCX user profiles
As mentioned earlier, Cotten resorted to fake customer profiles. These were fake insofar as the booked fiat money and cryptocurrencies did not exist at any moment. “Chris Markay,” the most used account, had over 220 million Canadian dollars paired with a handsome portfolio of various cryptocurrencies. The non-existent funds then exchanged Cotten for actual cryptocurrencies, which he subsequently billed from the platform. Also, the trading volume of QuadrigaCX has been artificially inflated.
Overall, Cotten captured the gigantic sum of 9,450 BTC, 387,738 ETH and 239,020 LTC. The investigators located only a fraction of these crypto assets. Bad news for the bruised QuadrigaCX customers. Their outstanding claims currently amount to 214.6 million Canadian dollars. Only 15 percent of them have been secured so far. Most recently, the FBI also intervened in the investigation.
source https://www.btc-echo.de/quadrigacx-bitcoin-boerse-soll-massiv-betrogen-haben translated by @tolgn1907