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Software Engineer Loses Life Savings in Quadriga Imbroglio (bloomberg.com)
Tong Zou wasn't a stereotypical crypto bro bent on accumulating flashy trophies such as Lamborghinis when he deposited his life savings into Quadriga CX's digital exchange. The 30-year-old software engineer, who'd been working in California for seven years, just wanted to save a few bucks on transfer fees after deciding to move to Vancouver. It proved to be a C$560,000 ($422,000) mistake. From a report: "It's all my savings, so I'm just living on what little I have left and trying to start over," Zou said in a phone interview Friday from Vancouver, where he has been living out of an AirBnB for the past month. "It pretty much took everything away from me." Zou is one of Quadriga's 115,000 clients who are out of luck after the sudden death of the firm's founder left C$190 million in cryptocurrencies protected by his passwords unretrievable. The exchange has halted operations and was granted protection from creditors on Feb. 5 in Nova Scotia Supreme Court in Halifax.
"crypto bro bent on accumulating flashy trophies" ? Misandry much?
Wasn't the most recent news that there were suspicious circumstances about how much $ was in the coin purse, and whether the guy actually died or was had his death faked?
It doesn't matter what you're doing, but there is an old saying about not keeping all of your eggs in one basket. Sometimes even incredibly intelligent people are capable of horrible foolishness.
Not your Bitcoin. It boggles my mind that someone would entrust their life savings on a single crypto exchange. At least spread it out to a few different ones, the cost to withdraw Bitcoin on quadriga was nothing ( they paid the fee ). A $100 trezor would also have been a great part of the strategy.
software engineers are perfectly capable of charting out the future of the species in spaaaaaaaaaace
They are; just not Canadians.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Because that sure sounds like a possibility. While he can't get the money back now, I hope the IRS and the Canadian equivalent are looking at this closely, since this is INTERNATIONAL commerce, not just interstate commerce, and deserves all the scrutiny it can get so people understand the consequences of flaunting the rules.
Losing the money is bad, but having it publicized you were dodging taxes while fleeing the country in the process....
He used this cryptocurrency in an attempt to get around the laws and banking regulations of the US and Canada, and now we're supposed to feel sorry for him?
I mean, it's always sad when folks lose everything. But it's not like this guy was particularly innocent in what he was doing.
Check your premises.
"life savings in a crypto coin"
that's all I needed to read.
At least he avoided losing his life savings because of a collapse of the global banking system.
Before investing your life savings into something, it would be wise to do a lot of research into what you're doing. With all the disaster stories from Bitcoin (Mt. Grox) you'd think someone would at least look into history to realize that although there might be legitimate Exchanges, some are completely unregulated scams as well.
If you don't hold your own keys, you don't hold your own crypto. Clearly not a "crypto bro." should have held this coins on a hardware device.
You can accumulate a "life savings" when you've barely lived? I dunno but saving up $500k in a matter of a few years of your career seems like you either got lucky or you're very successful and are going to be just fine.
420k in 7 years is only 60k a year. With a decent-paying tech job in California and humble living conditions he could easily have saved that up.
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
The great thing about cryptocurrency is that we no longer need centralized entities such as banks or exchanges. Why not keep all that digital cash in one or several wallets that you control? What would possess someone to send it instead to a completely unregulated, unsupervised and unvetted exchange that turned out to be one guys server? I'd get nervous about moving a couple 100k between banks - proper banks.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Why invent a digital currency with little transaction costs which requires exchanges to operate is my question? Why not engineer the coins to be Uber-divisible or have a million more of them so your lowest denomination is of so little value, it can be used in goods-exchange, like the penny?
I love how cryptocurrency is like a history lesson for Libertarians with regressive economic attitudes. They get to learn the hard way why each discrete financial regulation we have today was enacted.
You're right, I wouldn't steal a car. But if it were possible, I sure as hell would download one!
That's right but not relevant here. He wasn't do that not as an investment
It's incredibly relevant - he literally took all his eggs (money) and put them in one basket (Enquadrdriofomaligo or whatever it was called).
It doesn't matter if the purpose was investment or short term transfer.
Same reason why when traveling you would not get a bunch of travelers checks and keep them all in the same place. (not that anyone uses travelers checks anymore, but still).
He was moving to Canada from the US and wanted to save money on conversion fees
Unstated: also wanted to avoid Canadian taxes on said money.... and he paid the ultimate conversion fee instead.
It's not that I don't feel somewhat sorry for him, but I think he was way more foolish than unlucky. "unlucky" is almost always just another way to say "didn't really think through possibilities".
"There is more worth loving than we have strength to love." - Brian Jay Stanley
That is what cryptocurrency should be called. Because that is just what it is.
Corporatism != Free Market
Most cryptos have can divide to 8 decimals. Also exchanges are for converting to different types of crypto or fiat, just like stock exchanges.
How do you figure? He got a job at age 23 that allowed him to put aside 60K a year in the most expensive area in the US?
He must have been making 150000 to 200000 a year before taxes right after college and lived in a trailer. Humbly. ...and then he plowed everything into a risky crypto-currency?
No, sorry, it doesn't add up.
I'm not sure "saving on fees" was the real motivation here. Tax avoidance sounds a lot more likely. In any case, ouch. Note to all 30 year olds: just because you're smart in one area doesn't mean you're master of all. Be careful. What you don't know CAN hurt you. Hard lesson to learn but I'm not sure which lesson is relevant here.
If the guy was just trying to save bank fees, then the lesson is "banks exist and charge fees for a reason and now you know why".
If he was trying to avoid taxes, the lesson is "you want to operate outside the law you better be ready for the wild, wild west, baby!".
When one person holds the key to your wealth it better be you personally.
How many users were aware that a single person controlled a key that if lost would wipe out their money?
Work Safe Porn
They get to learn the hard way why each discrete financial regulation we have today was enacted.
It's not like countless people have not lost money from highly regulated banks as well.
I've lost way more money on bullshit fees and predatory practices than I've ever lost through cryptocurrency. At least there I can be in some control over maintaining my own wallet if I wish.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Bwahaha this guy's an idiot! When you have 6-digit amounts of money, you don't put such a large fraction of it in any one bank, never mind in some sketchy-ass cryptocurrency exchange! His net worth must've been all over the fucking place since it was basically tied to cryptocurrency values! Did he look at his life savings losing and earning (but mostly losing) the value of a high-end sports car every day and think "Yes, this is fine"!?
Oh, and there's the fact moving such quantities of money through such unaccountable mechanisms likely amounts to some kind of white-collar crime - or is at least an indication that he's likely engaged in some. Could be another hilarious self-own in the making!
"When information is power, privacy is freedom" - Jah-Wren Ryel
If you're going to invest in crypto currencies, then, you better be prepared to lose it all. It's no different than if you invested all your money in one company's stock and then that company went belly up the next day. Crypto currencies are not banks or credit unions, they are most likely not insured like a bank/credit union inside the US would be.
I'm not one to say I told you so, but...
https://youtu.be/9AajslFuPro
You are welcome on my lawn.
To have $422K by the time you're 30 is pretty good.
Just like stock exchanges, except that your life's savings are on a thumb drive buried with some rando tech-bro.
except that your life's savings are on a thumb drive buried with some rando tech-bro.
Even the dimmest tech-bro has backups. That there was what we refer to as a Tech-No.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
And 6x the cost of living ...
He was supposedly just moving money around (was it legal? I don't know), but I wouldn't give that amount of money to some unknown, startup company even for a millisecond. That amount of money only gets moved around from credit union to credit union with wires, as far as I'm concerned. I wouldn't even do a cashier's check for that amount of money.
I don't respond to AC's.
Its pretty common to put your life savings with one bank or brokerage firm.
That is just a little more stupid than what this guy did to my mind. It's "insured" but what happens in the event of a truly huge failure or complete market crash? Insurance only works to a point.
I have multiple banks, brokerages. Those are all independent from what my wife has. Why would you NOT keep several sources to store income, rather than risk losing it all?? It's really easy to have multiple money stores, just make sure they are documented so you remember.
The crypto would have been better off in a personal hardware wallet: providing he took proper precautions
Totally agree there. Then he could have had multiple forms of backup. I generally try to use exchanges as just that, and keep funds in a wallet I can control. I do keep some with the exchanges though just as yet another possible source...
But I wouldn't have piped it all through one exchange, through one currency... would have done some largish amount in cash as well, even with the fees.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
At least from the tone of the article, it doesn't sound like he is playing the pity card or blaming anyone but himself, so I'll give him credit for that.
There are much safer while still being cheaper ways of exchanging money using securities, usually using dual listed ETFs like DLR(.TO). Maybe not as cheap as this scheme, but the only real risk is if the exchange rate goes to shit during the week or so this all takes, compared to the colossal risk associated with anything crypto related.
It seems all(?) commenters here think, the owner is really died!
Look at how public interest in cryptocurrencies died (for a while now)!
Is it really hard to guess that the business was going bad for a while & the owner decided to runaway w/ all customer money, instead of declaring bankruptcy?
Why the owner decided to go to India? :-)
Supposedly, "to build an orphanage"!
Is it hard to guess he went there because it was cheap/easy to buy a fake dead certificate?
If he is really dead then where is the body?
Is anybody saw/verified the body?
"Deposited his life savings into Quadriga CX's digital exchange" were the stupidity keywords that convinced me not to feel sorry for him.
After all of the Bitcoin exchanges that have failed over the past few years, why do people still DO this?
Tong Zou, that's who. Didn't you read the article?
#DeleteFacebook
He should have known a Quadriga Imbroglio was a bad place to stash his life savings - Alfa Romeos are notoriously unreliable.
I'm no math expert, but it does sound like he was spending 3x the money he earned.
#DeleteFacebook
Gambling addiction is a serious problem. What makes it worse, is when it is classified as investing. Real good financial advisers advise to only invest as much as you can safely loose, many will just say you are not investing enough. And make you feel like you are a sub human, because by 40 you do not have a million dollars in your investments.
Cryto Currency is one of those get rich quick schemes, which is a bastardization on how capitalism should be working.
The way investment suppose to work.
We have a company that produces X or will want to produce X, but they don't have enough capital to continue on and expand.
They sell you shares to the company, now based on their business plan and general forecast you can determine if X is a safe bet or not. Now if X is a hit, other people will want in, and raise the price of the stock, which you then can sell and make a profit off your investment, if X fails, then you can sell the stock for less and loose out, but perhaps prevent from loosing more.
The problem that seems to happen is there are too many companies that no longer make product X, they just make money off of the valuation. We no longer invest in Apple, because Apple is trying to make the next big thing, we invest in Apple because its stock has historically risen. Crypto-Currency is trying to make money of the rarity of that unique number, that matches an algorithm. It isn't tied to anything, and without any controls their prices rise and fall sharply. Which means if such a company goes out of business, people will be at loss without having anything real to help protect themselves.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Someone already said it above, but this too was my reaction (I mean, after "the hell was he thinking"). This would have been far worse had he been some poor sap 3 days from retirement with his cottage already picked out and his grand kids excited to spend more time with him.
In today's age if you're in the black at 30, you're pretty far ahead of most. If he was able to squirrel away 400k at this point in his life, we'll probably be fine.
I'm not buying his story. He has nearly half a million just sitting in the bank and decides to dump it all into a currency exchange to avoid conversion rates? That seems highly unlikely. He'd have been much better off buying stocks, or just taking the hit in the conversion rate than dealing with the Bitcoin transfer mark-up. I looked into this a while back and, even when Bitcoin was level or edging upward, the gap between buying and selling digital currency was greater than the cost of converting between USD and CAD.
So either he's telling the truth and didn't do his homework, or he is lying and got busted when the exchange went belly up.
"Deposited his life savings into Quadriga CX's digital exchange" were the stupidity keywords that convinced me not to feel sorry for him.
After all of the Bitcoin exchanges that have failed over the past few years, why do people still DO this?
TFS says he, "just wanted to save a few bucks on transfer fees" moving from CA to Vancouver, so he probably just intended to park the money for a very short time while he moved and found a new bank. Seems dumb in any case. Nerdwallet lists the average international bank wire fees at $45 outgoing and $13 incoming, so he risked $422K US to save $58. Cheaper still would have been to bring some cash, deposit a check to open a new account and use a CC for a bit. Some life lessons are hard, but "penny wise and pound foolish" doesn't have to be one of them.
It must have been something you assimilated. . . .
Yeah, that is why I am really skeptical of they guy's story. If all he was really trying to do was save money on transfering between banks, transfering all his money into an exchange (which has a a fee), then finding enough sellers to convert nearly half a million dollars into crypto (which also has fees), then later find enough buyers to convert it back (more fees) and finally transfer it back to a bank? That makes zero sense unless he also believed it would be making money in the process.
plus that third currency is extremely volatile
I had many of the same thoughts you did, but especially this one I don't see questioned my many other people - moving 500k into BTC or the like, even if only for a day is a huge risk in terms of volatility. What if that is the day BTC decided to take a 20% drop just for fun? In fact you can almost be sure that speculators noting such a large volume of purchase would figure out some way to screw the guy short term to make him panic and sell...
I still see BTC as a viable investment, but as short term storage it is nuts and then there are the other factors you mentioned. He was absolutely trying to do something.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
pound foolish. Why would a smart person risk that much money on something as notoriously unreliable as bitcoin just to save a few $ in wire transfer fees?
Some companies sell and advertise their stock, that is their product.
Dead giveaway is big money golf tourney advertising. For products that nobody buys based on advertising. For example: 'Is that a Nortel network?' Nobody ever bought networking gear based on an add during the Masters. They were selling/advertising/pumping Nortel stock. Happens all the time.
When you see that, long, way out of the money puts. Buckets of them, they're cheap. Sure 'long odds gambling', but good bets, so do enough of it and it's _not_ gambling. Sure beats the state lottery with it's 50% house odds.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
He already paid U.S. taxes on all the money when he earned it in the U.S. And there's no Canadian law requiring you to pay any Canadian taxes on money you bring into the country.
He lost all his money AND moved to Vancouver.
Dunning-Kruger effect. They think they are smarter than all the other idiots who were scammed.
why do people still DO this?
Metal poisoning. It's all the aluminum in the air.
Real good financial advisers advise to only invest as much as you can safely loose, many will just say you are not investing enough.
Investing and speculating are very different things, though they sometimes use the same tools and thus look somewhat similar. One cannot invest in bitcoin.
We no longer invest in Apple, because Apple is trying to make the next big thing, we invest in Apple because its stock has historically risen.
Some do one, some do the other. But that's somewhat orthagonal to investment vs speculation. Buying Apple stock because you are literally betting that their next thing will be big is speculative. Doing the same with a large basket of companies with a statistical track record of the next big thing can be a sound investment. Heck, in the modern world it's hard to see buying the stock of any one company as anything but speculative.
Actual investing is still very much a thing, however, and it's where most of the big money is, from pension funds to trust funds.
Socialism: a lie told by totalitarians and believed by fools.
software engineers are perfectly capable of charting out the future of the species in spaaaaaaaaaace
They are; just not Canadians.
Why can't Canadians be in space?
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
except that your life's savings are on a thumb drive buried with some rando tech-bro.
Even the dimmest tech-bro has backups. That there was what we refer to as a Tech-No.
Play crypto games, get crypto prizes.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
How am I the snowflake, Sinji? I'm not the incel being triggered by someone being called a "bro."
Incels, snowflakes? Have I stumbled upon the comments section of Youtube?
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
why do people still DO this?
Metal poisoning. It's all the aluminum in the air.
Chemtrails.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
Apparently, you can take it with you.
But really... A software engineer who puts his life savings entirely in cryptocurrency is not a good software engineer. He should have known better.
This unfortunate fellow uncovered a failure mode of a technology. Pitot tubes icing over (Air France Flight 447 had iced over pitot tubes); faulty sensors and an aggressive safety system (The Lion Air 737 crash); the recent Wells Fargo outage reportedly due to a data center issue highlighted some issues with a cashless econonomy.
Very unfortunate but safety rules are written in blood (and money).
Smart people don't trust their cryptocurrency to exchanges. They only keep what they're immediately buying or selling at the exchange and keep the rest of it offline, whether in a hardware wallet (like one of the Trezor or Ledger devices) or even in a paper wallet (such as the ones produced by bitaddress.org) stashed away in a safe place. Instead, for want of a minute and a piece of paper, the subject of TFA is out over $400k.
20 January 2017: the End of an Error.
I feel sorry for this guy. And yes I think it's a very bad idea to put all your savings into some unregulated storage, but still.
Health is more worth than money and he seems to make the best of it, so good luck to him.
We suffer more in our imagination than in reality. - Seneca
Comment removed based on user account deletion
how long it would take for 115,000 clients with distributed password cracking software to crack the exchange keys?
Certainly sounds like they've got a lot of motivation to give it a go, and a reasonable proportion of them would have access to decent hardware.
You are in a twisty maze of processor lines, all alike.
There is a lot of hype here.
What is they say about putting all your eggs in one basket? Plenty of people manage to get by with 0 in savings let alone around half a fucking million. Fuck off. No one cares.
Wanna buy a shirt?
https://www.redbubble.com/people/stealthfinger/shop?asc=u
See subject. Repeat until it sinks in.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
Most definitely ill-gotten gains. Why else would you prefer this over a $50 wire transfer fee unless you're trying to hide the source of your funds from government authorities?
Ok people place your bets, what really happened here?
A. Cold wallet never existed, founder faked his own death, transferred funds out long time ago, without the knowledge of his wife or the board. Nobody will roll over because nobody actually knows anything.
B. Cold wallet never existed, founder faked his own death, transferred funds out long time ago, with the full knowledge of his wife and the board, who were all in on the conspiracy to redistribute the funds after the bankruptcy proceedings were long over. Somebody will roll over faced with the possibility of extradition to the United States and life in a U.S. Federal "pound-me-in-the-ass" prison.
C. Cold wallet never existed, founder told his wife this fact and the whereabouts of the actual funds, she lured him to India and killed him with some spicy Vindaloo. Board never involved. She may or may not roll over under interrogation faced with the possibility of extradition to the United States and life in a U.S. Federal "pound-me-in-the-ass" prison.
D. Cold wallet never existed, founder told his wife this fact and the whereabouts of the actual funds, she lured him to India and killed him with some spicy Vindaloo. Board was in on the conspiracy to redistribute the funds, and are now covering their asses, but somebody will roll over faced with the possibility of extradition to the United States and life in a U.S. Federal "pound-me-in-the-ass" prison.
we live in a world where a thirty year old can be "smart" enough to amass $420K in saving, but dense enough to invest it all in crypto.
Not to mention that "... the sudden death of the firm's founder left C$190 million in cryptocurrencies protected by his passwords unretrievable." Seems like a lot of people didn't do due diligence. Or this is a cover story, and the money actually went somewhere else. Bernie Madoff could've had a big win if he'd faked his own death that the right time. (But, hey, that guy's still a player: cornered the market on Swiss Miss in prison.)