Quadriga Fintech Solutions was Canada’s largest cryptocurrency exchange, but filed for bankruptcy in 2019 after the CEO and founder died. Up to C$250 million (US$190 million) in cryptocurrency owed to 115,000 customers was missing or could not be accessed because only Cotten held the password to off-line cold wallets.
Gerald Cotten founded Quadriga in November 2013 with Michael Patryn. They did local trades, launched their online exchange, installed a Bitcoin ATM, and tried to raise money and list on the Canadian Securities Exchange, but ran out of money by June 2015.
Quadriga, a Canadian Bitcoin exchange, experienced cash-flow problems due to its reliance on external payment processors and its lack of a proper accounting system. In addition, C$28 million was frozen by the Canadian Imperial Bank of Commerce in January 2018 due to fraud.
Quadriga co-founder Michael Patryn was identified as Omar Dhanani, who had been convicted of identity theft and served 18 months in prison. According to Jennifer Robertson, Cotten’s widow, he died in India on 9 December 2018 after episodes of cardiac arrest. He left a C$9.6-million estate to his widow, which included an airplane, a sailboat, a 2017 Lexus, and real estate in Nova Scotia and Kelowna.
After Gerald Cotten, Quadriga’s CEO, died, the exchange was put into maintenance mode for several days, and then announced that they were applying for creditor protection. However, blockchain analysts have reported that they are unable to find evidence of Quadriga’s cold wallets on the blockchain.
Reddit users have suggested that Cotten faked his own death to defraud customers, while others believe that Cotten’s death exposed a Ponzi scheme.
The Ontario Securities Commission concluded that Gerald Cotten’s Quadriga was a fraud and a Ponzi scheme in June 2020 and that his widow agreed to forfeit $12 million in assets. On February 5 2019, the Nova Scotia Supreme Court ordered a 30 day stay on claims against Quadriga, and appointed Ernst & Young as monitor to manage the company’s finances.
Below is Netflix’s Current documentary focussing on the death of Gerry Cotten and the financial investigation of Quadriga’s missing money “Trust No One, The Hunt for the Crypto King”