The former owner of QuadrigaCX allegedly transferred funds to other accounts in his name from unknowing users before his death last year.
According to The Wall Street Journal and CoinDesk, the court-appointed monitor of the exchange published a 70-page report describing the financial status of the platform. It revealed that its founder Gerald Cotten deposited “significant volumes” of currency to personal accounts on other trading platforms, using the money to purchase luxury goods and real estate.
Earlier this year, QuadrigaCX completely closed down its business, leaving many users without their funds. it was reported that QuadrigaCX has a debt of $215 million CAD (or around $163 million USD) to 76,000 users, but so far they only recovered $33 million.
Cotten’s wife stated that most of the exchange’s funds were stored in a cold wallet which could only be accessed by Cotten alone as he had the password.
However, it was found out that “instead of maintaining Cryptocurrency within Quadriga-controlled cold wallets, large volumes of cryptocurrency were transferred … to accounts at competitor exchanges maintained in Mr. Cotten’s personal name.”
Some of the funds were returned to QuadrigaCX’s exchange, but the rest of the crypto funds were transferred into accounts owned by Cotten. Cotten moved nearly $80 million during the span of three years, funds the monitor was “unable to account for.”
The sudden death of Cotten and the large sums of money missing have led many to believe that the founder faked his death to not face the repercussions. While the report does not confirm such a possibility, it does agree that the situation was created due to financial misconduct on the founder’s part.
The monitor also found very few business records and with the exchange apparently communicated through multiple devices and accounts. The report states that they were “unable to locate any evidence to suggest that Quadriga maintained any traditional books or accounting records since at least 2016.”
Cotten transferred large amounts of funds from user accounts without being detected, and with that money, he and his wife purchased “significant assets including real and personal property” over the last few years, and they “frequently traveled to multiple vacation destinations often making use of private jet services.”
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