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QuadrigaCX's Crypto Accounts Were Emptied Months Before CEO's Mysterious Death, Putting Fate of $137 Million In Doubt (businessinsider.com)
An anonymous reader quotes a report from Business Insider: Millions of dollars were missing when the CEO of a crypto exchange died without sharing the passwords to his accounts. Investigators recently cracked his laptop -- only to find the money was gone. Gerald Cotten, the founder of QuadrigaCX, was thought to have had sole access to the funds and coins exchanged on it. After his death in December, his colleagues said that about $137 million in cryptocurrency belonging to about 115,000 customers was held offline in "cold storage" and inaccessible. The case has sparked numerous theories, including that Cotten faked his own death and ran off with the cash. A court-appointed auditor, Ernst & Young, was able to crack Cotten's laptop and found that the accounts were emptied in April, eight months before his death, it said in a report last week.
The investigators said they found other issues too, such as that Quadriga kept "limited books and records" and never reported its financials. Ernst & Young also said it found 14 user accounts linked to Cotten that traded on Quadriga's exchange and withdrew cryptocurrency to addresses not tied to Quadriga. Burdened with $190 million in debt and unable to find or access the money, Quadriga filed for creditor protection in late January. A Nova Scotia court threw the company a lifeline this week, granting it a 45-day extension that prevents creditors from filing lawsuits against it until mid-April.
The investigators said they found other issues too, such as that Quadriga kept "limited books and records" and never reported its financials. Ernst & Young also said it found 14 user accounts linked to Cotten that traded on Quadriga's exchange and withdrew cryptocurrency to addresses not tied to Quadriga. Burdened with $190 million in debt and unable to find or access the money, Quadriga filed for creditor protection in late January. A Nova Scotia court threw the company a lifeline this week, granting it a 45-day extension that prevents creditors from filing lawsuits against it until mid-April.
When I RFTA, I see that Cotton died in India - how was this verified?
If I were an investor, I would want DNA proof that he was dead otherwise, I would think Interpol should be notified to start looking for him.
$137M disappears eight months before the only person with the password dies?
It could be criminally inept business practices or just simply criminal. I would look at the latter scenario.
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The whole blockchain is massive (around 200GB now) and you can obfuscate transfers a lot. Especially if you do bitcoin/ethereum conversions. The theft will not be immediately apparent.
Thanks for mentioning the term "clawback" in this context; I learnt something interesting tonight.
For anyone else interested, a couple of articles that go into further detail:
Clawback Lawsuits on Rise in Aftermath of Ponzi Schemes
Ponzi Scheme Victims May Owe Triple Damages For Usury In Clawback Lawsuits - A New Tool In Ponzi Scheme Litigation?
He *had* cryptocurrency valued at 137 million. Which means he could have grand old time ordering stuff you can buy with cryptocurrency. But as soon as he tries to convert that asset into something substantial like a house, a boat, or a car he'll be leaving traces.
Hiding liquid assets is not a new thing. And it'd be really easy to escape the law *if you never tried to use those assets for anything but hiding*. Cryptocurrency is surely an advance from the point of view of money laundering, but it's not a panacea.
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