QuadrigaCX Officially Labeled a Ponzi Scheme
QuadrigaCX was a fraud: that's the conclusion reached by the Ontario Securities Commission (OSC) regarding the Canadian exchange following the alleged death of its founder Gerald Cotton.
For those who don’t remember the events of last year, we’re talking about a case that could be made into a movie: the exchange’s founder was actually missing for a long time and then pronounced dead in India, where he had traveled several months earlier for treatment of an alleged illness.
Only Cotton held the personal keys to the various cold wallets, so it was impossible to move the funds after his death. At the time, users accessing the platform could only see a screenshot of a maintenance routine on an emergency server.
That’s when the truth emerged: not only were customer funds not safe, but they were being used by the founder for questionable operations.
In fact, the funds were found on other exchanges, leading to doubt as to whether they were actually lost or cleverly moved before the founder staged his death.
Continuing the analysis of the transactions made by the founder, it was also discovered that he used other clients’ funds to cover losses: they were used to pay other users thus giving the impression that the platform had no problems.
The exchange then declared bankruptcy with a loss of over $190 million and legal costs of just under $2 million.
Of all that, only $25 million has been recovered, which will be used to compensate over 70,000 users who were victims of a scam created by an unscrupulous man who may have even faked his own death.