The story of what has happened Canadian crypto exchange QuadrigaCX sounds almost like a work of fiction, and while the details of history are still unfolding, here is an overview of what we know about Quadriga so far.
How It Started
"It is with a heavy heart that we announce the sudden transfer of Gerald Cotten, co-founder and CEO of QuadrigaCX. A visionary leader who transformed the lives of those around him died Gerry died of complications with Crohn's disease on December 9, 2018, while traveling in India, where he opened an orphanage to create a home and safe haven for children in need. "
Nobody is sure when Jennifer Robertson, Gerald Cotton's Estate Executor has made the aforementioned statement, but consensus is that it was around January 1
Read more: Canadian Crypto Exchange QuadrigaCX owes $ 190 million to customers
The problem begins
Then Canada's largest crypto swap suddenly went offline due to unannounced system maintenance upgrades, according to a site statement. Some time later, Robertson signed a consumer protection power. An excerpt from the executive order reads:
"After Gerry's death, Quadriga's statement of cryptocurrency has become inaccessible, and some of it can be lost."
According to her, Cotton was a resident of 26,500 Bitcoin, 11,000 Bitcoin Cash, 11,000 Bitcoin Cash SV, 25,000 Bitcoin Gold, about 430,000 ETH, and approx. 200,000 Litecoin. Some may have been held in exchanges, but at this point it is unclear where the private keys are.
Cotton, who was the only director and officer in Quadriga, drove the exchange on his encrypted laptop, which no one seems to have the password for.
The story also includes an encrypted USB. Apparently, an expert has tried to access both the USB and the laptop, but has so far failed. But perhaps as a failsafe, they said there was an automatic method for the hot wallet to be topped.
While the details of how this works, it is unclear, said Aaron Matthews, Quadriga's Operation Manager around January 17 that, "Warm wallets are consistently replenished, there has been a higher demand for cryptos that have caused these delays. They go out in order and we are working to improve these timelines. "
The obvious question at this time is how could they fill the hot wallets without private keys?
Read more: Changpeng Zhao, about QuadrigaCX: Never has the CEO private keys
And that brings us to what many have wondered, this was a detailed exit fraud? Before you roll your eyes, there may be a truth to this. The exchange had been subject to fiat withdrawal issues since last October as reports suggest that Canadian banks refuse to provide their services for the exchange. As such, they had to rely on payment processors until apparently a bank suddenly froze a large part of the stock market funds. This led to legal battles that apparently Cotton subsidized from his own pocket.
There was no indication of this in the statement. In fact, it was quite the opposite. The statement reassures customers that improvements should come to the site and services and suggest that Aaron Matthews "continue what Gerry started."
Everyone would have been peaceful if it wasn't for a customer who complained on January 16 that his Bitcoin withdrawal had been waiting for 24 hours. Quadriga reacted with a tweet saying:
Heat bands are consistently replenished, there has been a higher demand for crypto that has caused these delays. They go out in order and we are working to improve these timelines.
– QuadrigaCX (@QuadrigaCoinEx) January 16, 2019
Until January 31st. After many more complaints, Quadriga's site is shining with a message confirming that the bankruptcy has begun.
Kraken's CEO Jesse Powell tweeted:
We have thousands of wallet addresses known to belong to @QuadrigaCoinEx and examine the bizarre and honestly incredible story of the founder's death and lost keys. I do not normally encourage the daily allowance, but if @rcmpgrcpolice looks at this, contact @krakenfx
– Jesse Powell (@jespow) February 3, 2019
In addition suggests a further tweet by Ryan Kneer that Powell has fought through Quadriga's transaction data, and a complete report on Quadriga's "malfeasance" should be published soon. Perhaps it will shed light and give the necessary answer to the innocent tale.
Jesse, @PofofofResearch has spent the last 24+ hours chambering through transaction data, compiling notes and screens. He will publish a full-length report covering the extent of QuadrigaCX's malformation soon.
– Ryan Kneer⚡ (@ryankneer) February 3, 2019
Read more: QuadrigaCX debacle: Truth or exit scam? society responds
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