Yet until today, nobody knows how it all happened. The Gerald Cotten case has remained a mystery, and the more time passes, the harder it will become to solve it.
Imagine you were a Canadian investor who wants to get into the crypto world. The problem is, there are not many exchanges in your country. Because there was no other choice, many joined Quadriga CX, the first Canadian major platform founded by Gerald Cotten.
Although the founder wanted to expand the cryptocurrency movement, why he built the company has little explanation, especially when looking at his shady background.
Anyhow, you join this professional exchange and hope to make some good trades. But if you were to save your profits in this exchange, you’d find an unpleasant truth.
No matter how smart you are trading, you cannot win if without control. A platform can offer you a trading service, but they cannot secure your amounts. It’s not about the exchange. You simply don’t have control of that money until it gets to your wallet.
Given its trading volume, one would assume there’s a professional structure running everything in the background. But would you be shocked to know that this million-dollar exchange was running only from Gerald’s laptop? Wherever his computer was, that was the whole physical company. That includes all the private keys that keep investor’s money safe.
Without knowing it, you’d be trusting a single person to keep your funds protected.
Who Is Really Gerald Cotten?
As a founder of such a large exchange, it surprises us how he wouldn’t think of upgrading infrastructure. Due to this lack of preparation, the story didn’t end very well.
Part of the fault corresponded to the investors who didn’t research well enough. But let’s not forget that Quadriga CX appeared before 2018 when people would bet on any cryptocurrency like crazy.
Most consider Gerald Cotten as a Canadian “entrepreneur” who founded QuadrigaCX after hiring some developers. Before the crypto exchange, he was involved in several HYIPs and Ponzi schemes in his early years, which doesn’t bring much confidence to investors.
But people can change, and the Quadriga initiative worked for many years. Then, why do thousands of people see Cotten as a bad guy?
Well, he passed away in December 2018 due to “complications of the Crohn’s disease” after going on vacation to India. It shouldn’t have affected the business if it wasn’t because he was the only one with access to the cold wallets. Without the passwords, over 75,000 investors got ripped off for over 250 million Canadian dollars.
And we say ripped off because everything seemed like a scam. It’s not only because of Gerald’s background nor the fact that he could have faked his death with so much money. Before the unfortunate event, Gerald was already seeking for credit protection due to unmet payments.
It was mid-2018, the crypto bubble was deflating, and many investors asked to get their money back. They wanted to sell and get out of the market, but whenever they tried, the site would delay and keep their funds on hold for long weeks. Users were more and more confused.
What Happened To The QuadrigaCX Exchange?
Curiously enough, the platform was still running for months after his death. So new members were signing in and putting their money on their exchange without knowing about the tragedy. Since Cotten controlled the platform from his laptop, which then became inaccessible, it took longer for the site to close.
In early 2018, the website already had trouble keeping the monthly volume high. They’d use countless fake bot accounts with fake funds trading against real customers and make the volume look bigger than it was.
Mind that this team managed millions worth of QuadrigaCX assets with no bank account, only third-party payment processors. Later, they had a hard time proving who this money belonged to, which led to over $30 million funds frozen.
Later in April 2019, the company declared bankruptcy and closed the site, leaving all investors frustrated. “Hello, we cannot return your money and have to close the site. Have a nice day!” Surprise, surprise!
If Gerald was already working on deceitful schemes before, it wouldn’t surprise us to find him involved in another one. Very few people believe the official story and instead think he’s alive, enjoying the stolen funds in some remote island with Omar Dhanani, a scam partner from the past.
Quadriga’s creditors have sent his family an exhumation request to prove the death story, but they didn’t get any approvals. The official media may never find out what really happened.
Whether he’s alive or not, the funds are likely lost. Forever. He stored the funds in cold-wallet storage, safe from hackers… and everyone else.
Frequently Asked Questions
Why was Quadriga delaying large withdrawals?
Because of the just proposed theory, it may seem there were evil intentions to keep the money on the platform. In reality, investors couldn’t withdraw because Quadriga CX had most of its funds frozen.
As trading volume increased, so did complexity. When you don’t have a bank account and cannot verify transactions, you cannot pay investors back even if you wanted to.
The exit strategy makes sense as a dishonest way to avoid bankruptcy. But if Gerald is really alive and could have planned such a plot, why didn’t he do something as basic as securing the payment system?
Why were people still using Quadriga despite the processing issues?
Quadriga CX offered better Bitcoin rates and was the only exchange offering them.
People would have stopped using it sooner if they knew the site shouldn’t be technically operational. But since Gerald Cotten passed away and nobody controlled the platform, it took a while to notice the inactivity. Even though he died in December 2018, nobody knew about the event until an email sent to investors after February 2019.
Isn’t there any way to access the $250 million lost?
The laptop was fully encrypted with all the keys private for Gerald. We neither know whether they found his laptop or it disappeared with him, which would be suspicious. In that case, the money would no longer be locked. Cotten could be using it right now in some remote location.