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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.
"So, you decided to invest in fake crypto-crime money and trusted it's safe keeping with a stranger..."
See how much better off you are converting your life savings into an online hoarding token whose value changes daily, and then entrusting your hoard to an AC on the Internet.
There's a job waiting for you: Finance Minister of Venezuela.
The rest of them are likely involved too. Since there is no way that company could run if all transactions had to be done via its CEO and the CEO leaves for India, and nobody raises a red flag, and somehow the company can continue to run without access to its funds, and no financial books, and so on.... lots of red flags with the whole operation.
He'll be found and arrested soon enough. He won't be dead, and won't be in India. He'll be in Canada or the USA not far from his wife.
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.
Mimetics Inc. Twitter
It seems that the primary function of cryto-currencies is to make bank robberies easier to do and more difficult to trace.
Can someone explain how the 8 months old "withdrawal" is only seen now and required hacking the computer.
Isn't the point of the blockchain you can trace (except through mixers or specific ZKP systems) transactions precisely because every node holds an exact and full copy of the ledger of transactions?
The only thing hacking the computer could provide is private keys to actually transfer value out of those wallets but the balance should have been public.
Here's the relevant part of the summary:
It seems it should be easy to tell from the public blockchain where the coins were transferred to, how many, and when....
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
Forged death certificates are fairly easy to get in India and not particularly expensive - might not've even got a real doctor, just a professional document forger. The thing is in India, record-keeping can be quite poor and sometimes the easiest way to get a document is just to get a forgery. A guy I knew was applying for a security clearance in Australia and needed a birth certificate. He'd somehow lost or damaged it, and the hospital where he was born had burned down with all its records, so he couldn't get a replacement. His dad went to a professional forger, gave him all the details, and got a convincing replacement. Aus DFAT accepted it without issues and he got his clearance. In this case there was no falsified information involved, but I imagine most forgers wouldn't bother to verify the information at all.
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?