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Digital exchange loses $137 million as founder takes passwords to the grave

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Ernst and Young, QuadrigaCX's bankruptcy trustee, has released a report indicating the CEO stole and squandered the vast majority of client funds before "dying" in India.

--- Quote ---In a bombshell 70-page report released Wednesday, Ernst & Young claimed that Gerald Cotten, who apparently died last December, transferred millions of dollars in crypto out of customer accounts and into other exchanges, with the funds being used to furnish Cotten’s personal lifestyle and trading habits. Overall, it appears that Cotten effectively stole more than $200 million USD from his customers.

“Significant volumes of Cryptocurrency were transferred off Platform outside Quadriga to competitor exchanges into personal accounts controlled by Mr. Cotten,” the report said. “It appears that User Cryptocurrency was traded on these exchanges and in some circumstances used as security for a margin trading account established by Mr. Cotten.”

Fees and trading losses “appear to have adversely affected Quadriga’s cryptocurrency reserves,” while other sums were sent to wallets whose owners EY could not confirm.

Between 2016 and the end of 2018, Cotten transferred 9,450 bitcoin, 387,738 ethereum and 239,020 litecoin out of his exchange’s accounts (respectively, $88 million, $105 million and $33 million USD at present market prices, though their values have fluctuated – and increased dramatically – over that time).

Cotten also appears to have created fake accounts on Quadriga, credited them with fiat amounts that did not actually exist, and use this fake fiat to purchase actual crypto from customers, with the largest account using the name Chris Markay.
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--- Quote ---EY also believes that properties in Nova Scotia, properties in British Columbia, investment securities, cash holdings, a boat, an aircraft, luxury vehicles and gold and silver coins that purportedly belonged to Cotten, and now belong to his widow Jennifer Robertson were paid for using Quadriga’s customers’ funds, and therefore should be liquidated.

“As Mr. Cotten’s and Ms. Robertson’s personal expenditures and the accumulation of their personal assets since 2015 was sourced from Quadriga funds, the Trustee intends to seek the recovery of the Preserved Assets subject to the Asset Preservation Order back to the Estate for immediate liquidation on the basis that the funds which Mr. Cotten directed be paid to them constitute preferences or transactions at under value under the BIA and may be subject to other causes of action asserted by the Trustee,” EY wrote.

The proceeds from these sales, if successful, will go to the creditors’ estate, and could total as much as $12 million CAD ($9 million USD).

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Unable to Retrieve Money, Cryptocurrency Investors Want Dead Executive Exhumed

--- Quote ---Lawyers appointed by the Supreme Court of Nova Scotia, where Quadriga is based, to represent its users asked Canadian law enforcement officials in a letter on Friday to exhume his body and conduct an autopsy “to confirm both its identity and the cause of death.”

They cited “the questionable circumstances surrounding Mr. Cotten’s death and the significant losses” suffered by his company’s investors, as well as “the need for certainty around the question of whether Mr. Cotten is in fact deceased.”

And time is of the essence, they said. The lawyers requested that the exhumation and autopsy be completed “by spring of 2020, given decomposition concerns.”
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Gerald Cotten died leaving his customers with next-to-nothing. Or did he? Have we learned nothing from the weirdest, most explosive story of the year?

--- Quote ---According to Vanity Fair and the Globe and Mail, Cotten shilled high-yield investment programs as far back as 2003 before starting his own pyramid scheme in 2004 at the age of 15. He first met Quadriga co-founder Michael Patryn, otherwise known as convicted fraudster Omar Dhanani, on the TalkGold message boards.

Both articles note that Cotten was associated with Liberty Reserve, a money-laundering platform shut down by U.S. authorities in 2008, as well as Midas Gold Exchange, which Patryn is affiliated with.

Vanity Fair argues that Cotten is still alive, and that Quadriga’s collapse was only the latest in a long series of successful exit scams. And Nathaniel Rich, the article’s author, is not alone in thinking that. Creditors want to know if Cotten’s body is really in the ground and if he really succumbed to complications due to Crohn’s.
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is this bitcoin? is it safe? anyone using it anymore now?


--- Quote from: Prepper456 on December 19, 2019, 02:02:59 PM ---is this bitcoin? is it safe? anyone using it anymore now?

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Bitcoin is only as safe as your ability to safeguard electronic secrets, which is extremely difficult and the big reason why people take the path of least resistance keep it all on an exchange.  Anyone who's using the same password on multiple websites shouldn't be in crypto.

It's used primarily for illicit transactions at this point, but most are speculative hoarders (known as HODLERS).


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