QuadrigaCX

QuadrigaCX was Canada's largest cryptocurrency exchange, launched in 2013. Its collapse is the oddest one here, because for a while it looked like an accident instead of a fraud.

In December 2018 its co-founder and CEO, Gerald Cotten, died of complications from Crohn's disease while travelling in India. He was 30. In early 2019 his widow told a court that Cotten had been the only person who moved coins out of the exchange's cold wallets, and that more than CAD 180 million in coins should be sitting in them, now beyond anyone's reach. The story spread quickly: the only person with the keys had died, and the money was locked away with him.

Then the court-appointed monitor, Ernst & Young, looked at the wallets. They were empty, and had been since April 2018, eight months before Cotten died. There was nothing locked away at all. In June 2020 the Ontario Securities Commission concluded that Quadriga had "operated like a Ponzi scheme." Cotten had been running fake trades under aliases, paying real withdrawals out of new deposits, and spending client money on houses, a yacht and a share in a private jet.

The commission's report found that more than 76,000 clients were owed about CAD 215 million and lost at least CAD 169 million of it. In the bankruptcy, creditors claimed about CAD 303 million, and in 2023 the trustee announced a payout of about 13 percent of that. Some people online speculated that Cotten had faked his own death, and creditors' lawyers asked, without success, to have his body exhumed. It doesn't change much either way, because the money was gone months before he died. If you can't audit a custodian, you're trusting it blind.

See Mt. Gox to FTX: The Custody Graveyard for where Quadriga sits in the pattern.