QuadrigaCX Users Lose $190M as Speculations Over Cotten's Death Swirl

QuadrigaCX appeared in 2013 and quickly became one of the largest Canadian crypto exchanges.

The Canadian Imperial Bank of Commerce froze five accounts owned by Jose Reyes - the owner of payment processor and exchange Costodian Inc., which was a subsidiary of QuadrigaCX. The governing body also asked the Ontario Supreme Court to hold $19.6 million and determine whether these funds belonged to Costodian, QuadrigaCX or users who deposited the funds.

The most unusual thing was the fact that, after the sudden death of its founder, QuadrigaCX exchange lost $190 million in digital assets, as the exchange representatives had not been able to find or access funds since Cotten's death in December, which led to a liquidity crisis on the exchange.

The exchange had only $286.000 is assets, while it owed its users about $190 million.

In early February, rumors began to gain momentum and the public found out that Cotten could have stored the personal keys from the exchange on paper in a safe.

The users of the exchange created a committee that provided recommendations for victims of QuadrigaCX. A committee of seven former exchange users assisted the law firms in representing all affected users in legal proceedings against QuadrigaCX. To whitewash her husband's reputation, Robertson made a statement in March, which claimed that Cotten invested his own money in QuadrigaCX to finance user withdrawals in 2018 after the CIBC froze five company accounts.

In June 2019, E&Y released its most recent report, in which it was explicitly stated that Cotten had transferred users' funds from the exchange and used them as security for his personal trading on other platforms.

Some Reddit users analyzed bitcoins taken from the QuadrigaCX exchange and found them being traded on other exchanges.

Reddit users claimed that the withdrawal of transactions that they had analyzed were found on the exchanges HitBTC and Bittrex.

"Cryptocurrency exchanges like Quadriga are not regulated in Canada, so there were no regulatory authorities supervising Quadriga. Until the founder Gerald Cotten died in December, Quadriga didn't appear to be having major problems and so many users didn't have any reason to think the problems were as bad as they turned out to be."