In one of the most intriguing crypto mysteries of 2019 thus far, analysts and investigative journalists recently discovered that a recently-deceased CEO’s one-man-show might not be the convenient excuse as to why $190 million in crypto assets have gone missing from Canada’s biggest cryptocurrency exchange.

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More Light Shed on QuadrigaCX Mystery

After shutting down operations abruptly on February 1st, new information is being gathered about the abrupt and somewhat mysterious closure of Canada’s largest cryptocurrency exchange, QuadrigaCX. The exchange had been plagued by customer service issues for months, who sometimes waited several weeks for their fiat withdrawals to be processed. On February 8th, it was reported that the CEO of the exchange, Gerald Cotten, had passed away back in December while in India. He left no information on how to access his business laptop, which was thought to contain the private keys and passwords of wallets holding an estimated $190 million worth of coins.

Cotten, age 30, passed away in December due to complications of Crohn’s Disease, without leaving his laptop password or any instructions on how to access the funds to another party. With a small staff and no offices, QuadrigaCX was supposedly entirely dependent on Cotton’s ability to process large withdrawal requests by moving funds locked in currently inaccessible cold wallets. The exchange was home to approximately 115,000 customers, all of which are still unable to access their holdings.

Even after the recovery of some funds in the form of Ethereum, a staggering $136 million is still missing, spread out among 115,000 affected customers.

CEO was Sole Owner of Company, Private Keys

The outset of the story paints the picture of a man with a life-threatening illness who made some extremely unfortunate decisions regarding the management of cryptocurrency funds belonging to users of the exchange he managed. Cotten was also the sole owner of QuadrigaCX and had no executive body to administrate the exchange in his absence.

As a private company that was 100% under Cotten’s control, he was legally permitted to do what he desired with its information, as far as exchange security practices were concerned. This means that if he wanted to hold all exchange-related logins, passwords, funds and private keys without making a back-up, then he could. Such a move could be considered extremely ill-advised, but as crypto-associated laws currently stand, it was within his legal right.

The whole affair is already being used as a rallying point for the introduction of stricter regulations for cryptocurrency, not just in Canada, but on a global scale. Recently, the story was pounced on by Gemini Trust’s Winklevoss twins, who are using it to promote their own highly-compliant, New York-based bitcoin exchange.

Official Narrative Leaves Community Scratching Heads

Regardless of what lessons there are to be learned from QuadrigaCX’s closure, the official story is not sitting well with the crypto community. Theories of what happened range from a well-coordinated exit scam to massive insolvency covered by fractional reserve banking to Cotten faking his own death (or, perhaps even a combination of the above). Commented Bitcointalk member buwaytress in a forum thread about the scandal:

“On the note of exit scam, I won’t dismiss it. Death in December and only outed now? And an exchange only leaving everything in the hands of a CEO? Surely this can’t be how even the most unprofessional firms operate? … exit scamming looking so, so tempting. Especially when there aren’t repercussions.”

Another member, o_e_l_e_o, conjectured that the whole situation was even more sinister than suspected, an idea echoed by an ever-growing proportion of the crypto community:

“I think it is more likely the founder has faked his death, and it is him that is still in control of the exchange’s addresses…

Remember that Quadriga required all its customers to go through KYC procedures. Given that this looks like it has been going for months, with no cold wallets in existence and the owner just constantly skimming funds off for himself, it was quite possibly [sic] he has used some of these KYC documents to open accounts at other exchanges under other people’s names and use them to cash out all the stolen coins. Doubly concerning for anyone who has lost their money on the exchange.”

On March 1st, the Kraken exchange sent out an email to its customers, pledging a $100,000 reward to anyone who brought information forward that helped locate the missing crypto funds:

“About a month ago, on January 26, QuadrigaCX suspended operations. Seven weeks prior, their CEO passed away suddenly and unexpectedly, leaving the business without a continuity plan. Supposedly, he was the only person who knew the location of and/or could access the client funds (fiat and crypto) totaling approximately $190 million US dollars (belonging to 115,000 clients). Some say the events and circumstances surrounding this case are too suspicious to be believed.

Kraken wants to bring awareness and attention to this case, in hopes that we can help discover some or all of the missing client funds…

Do you know who may know something that can help law enforcement locate the funds?

If so, let us know and we’ll pass your tips on to law enforcement. Kraken is giving up to $100,000 USD (fiat or crypto) as a reward for the tip(s) that best lead to the discovery of the missing $190 million US dollars.”

What is Known vs. What is Speculated

The hunt is on, and in the brief time since Kraken posted their reward offer, lots of new information concerning QuadrigaCX has come to light. Here are some interesting aspects of the story that are known for sure:

  • Gerald Cotten changed his will 12 days before his death, naming his wife as the sole heir of his estate.
  • Cotten’s name was mis-spelled on his official death certificate, which lists his death date as December 9th (news of his death was not made public until February).

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    Gerald Cotten’s India death certificate, with the mis-spelling highlighted in the blue box.

  • Over $100 million worth of ETH was withdrawn from Quadriga’s exchange wallets in December, just days before Cotten’s death, sent to addresses belonging to exchanges Bitfinex and Poloniex.
  • Contrary to claims stated in an affidavit filed by Cotten’s wife, BTC wallets under the control of Quadriga were found by auditors to have been empty since April 2018, and did not contain the tens of millions of dollars in customer funds believed to have been located there.
  • The FBI is now working with the Royal Canadian Mounted Police in order to track down the location of the missing funds, inviting those with information related to the matter to step forward to help their investigations.

Here are some allegations that have substantial evidence to back them:

  • One of Quadriga’s biggest shareholders, Michael Patryn, is thought to have been arrested and charged with financial fraud crimes in the U.S. under another name, Omar Dhahani, in 2004. Dhanani was an active member of, which was a site described by prosecutors as a “hub of online identity theft activity.” The website was mainly used to traffic stolen credit card and bank card numbers, per court filings associated with the case. As a result of his involvement, Dhahani was sentenced to 18 months in federal prison and released in May 2007.
  • In 2008, Dhahani is thought to have started a website called Midas Gold Exchange, under the name Omar Patryn, launched using the URL The website offered digital currency exchange services, focusing heavily on an anonymity-based virtual currency called Liberty Reserve, which was later shut down by U.S. prosecutors, who dubbed it “a criminal business venture, one designed to help criminals conduct illegal transactions and launder the proceeds of their crimes.”
  • Though denying being the same person as Omar Patryn to reporters, Michael Patryn, who acted as a security consultant to Quadriga in addition to being a major shareholder, was contacted by staff at The Globe and Mail through an email address associated with Canadian court documents also tie the two together by mentioning Omar Patryn as an alias of Michael Patryn, and also through a P.O. box associated with Midas Gold Exchange Inc. Six months later, Patryn co-founded QuadrigaCX with Gerald Cotten, however he quickly relinquished any executive duties in favor of becoming a shareholder.

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    A photo comparison of Dhahani (left) and Patryn (right). Source: The Globe and Mail

  • According to Coinbase CEO Brian Armstrong, QuadrigaCX was not likely to have been perpetrating an exit scam, noting that the market conditions to do so would have been horrible for an exchange founded back in 2013. Instead, he believes the exchange suffered a “multimillion dollar bug” in July 2017, in which millions of dollars’ worth of customer ETH went missing or became locked up in a miscoded smart contract. Quadriga was well-aware of the problem, having issued a statement about it on Reddit while simultaneously claiming that user funds were not at risk, and that only company profits had been affected.
  • As a result, Armstrong believes Quadriga found itself playing “catch up,” trying to replace lost funds with new ones, of which became too impossible a task to manage as the crypto markets rapidly declined through early 2018. In the months following the steep market sell-off, the exchange became insolvent and was on the verge of bankruptcy, though this information was never disclosed to its customers.

  • In order to help alleviate insolvency issues incurred during the “bug drain” outlined by Armstrong, QuadrigaCX created fake accounts on its own platform to trade against its users with a “significant volume” using “artificially created” deposits and then withdrew actual assets to accounts not associated with QuadrigaCX. This would also help explain issues with delayed fiat withdrawals stemming back to early 2018, well before Cotten’s passing.
  • The country of India, and specifically the region where Cotten was pronounced deceased, is known for having a “fake death mafia,” which lends credence to the theory that he may have faked his own death. However, Kraken CEO Jesse Powell is “99% certain” that Cotten is actually deceased.

The confluence of evidence presented thus far definitely points to wrong-doings on the part of Quadriga, but whether they were perpetrated by Cotten, Patryn, or Quadriga employees remains undetermined. Regardless of whether the whole affair was indeed a slowly-moving exit scam or an attempt to mask the exchange’s insolvency under grievous circumstances, Cotten’s death certainly became a great cover to hide the truth. However, the whole idea that Cotten was solely responsible for customer funds has been largely put to rest for the time being.

As the investigation proceeds, it is likely that a clearer picture of what happened will emerge. Until then, investors will have no choice but to wait and hope that the real thieves involved with the Quadriga saga will be brought to justice.