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After the presumed death in December 2018 of the founder Gerald Cotten (he would have died in India from complications due to Crohn’s disease), the exchange filed for bankruptcy, and those who had invested through the Canadian platform lost their funds. Cotten was the only one who knew the private keys to access the exchange where the cryptocurrencies were held.
Initially we thought of a strange case of mismanagement: how was it possible that one of the largest crypto exchanges in Canada had not contemplated a contingency plan for these situations? The investigations, however, later revealed that Cotten had set up a modern Ponzi scheme. He showed clients false data on the performance of their investments, while he used clients’ money for personal expenses or investments. Those who wanted to cash out were paid with new capital raised. Overall, Cotten siphoned off about $200 million from users.
As can be read in the by Ernst & Young, users will get a reimbursement check, but only part of the amount they lost: 13.094156% of their proven claim. QuadrigaCX faced around 17,648 claims, and one of them came from the Canada Revenue Agency (CRA). Quadriga would not have paid taxes of $11.7 million. Users will be reimbursed based on the cryptocurrencies held at filing for bankruptcy of the platform and based on their exchange rate in effect on April 15, 2019.
Many questions remain about these happenings of QuadrigaCX, which is certainly one of the most disturbing in the history of the crypto industry. Don't forget to subscribe to our free channel to stay updated on all the latest Bitcoin and crypto news.
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