[2019-02-06] Locked bitcoins in QuadrigaCX might be another exit scam. - page 3.

bbc.reporter

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News update. I reckon QuadrigaCX did not do an exit scam, however, it was a scam or it was running a scam hehehe. It appears that from the reported updates, QuadrigaCX never stored all of the users' coins in the exchange but used other exchanges to store the coins.

It was not clear why, however this appears to be part of another money laundering scheme or a basic scam.

QuadrigaCX, the Canadian cryptocurrency exchange that purportedly lost $250 million CAD ($190 million USD) of customer funds when the company’s CEO died, was appointed the professional services firm Ernst & Young (EY) as their monitor by court order on February 5, 2019.

The Big Four auditing firm has since released 3 reports in the creditor protection proceedings of QuadrigaCX. The third report was released on March 1, in which the firm identified 6 crypto Quadriga wallets primarily used to store Bitcoin (BTC).

What’s interesting is that out of the 6 wallets identified, all but 1 received no deposits and were inactive since April 2018. There was only 1 wallet that had an inadvertent Bitcoin transaction of nearly $500,000.

The third Ernst & Young report states:

“To date, the Applicants have been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Cold Wallets for deposits in April 2018, however, the Monitor and Management will continue to review the Quadriga database to obtain further information.”

Source https://www.investinblockchain.com/quadriga-update-wallet-empty-unused-since-april-2018-ernst-young/

bbc.reporter

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Quote from: o_e_l_e_o on February 12, 2019, 05:40:17 PM

Quote from: 24Kt on February 12, 2019, 05:32:52 PM

A legit company will not authorize only one person to hold vital info and passwords.

He was the sole owner of the company, and everyone else who worked for it was his employer. As it is a private company 100% under his control, he can do whatever he wants with it. If he wants to hold all the logins, passwords, funds, private keys, and whatever else himself with no back ups, then he can. Is it stupid? Absolutely, but that doesn't stop him from doing it. I wouldn't be surprised if there are other exchanges out there with similarly stupid set ups for holding their users' funds.

That might be what the people behind the exit scam want. That we think they are stupid for having such a set up. It would be more stupid to accept it and let them get away with it without an investigation, I reckon.

pacman7331

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Quote from: bbc.reporter on February 06, 2019, 12:14:08 AM

Does everyone remember the story of QuadrigaCX's founder, who was claimed to be the only person in control of the exchange's cold wallet, died in India on December, 2018? There are new stories surfacing that the people left running the exchange are using the founder's death to exit scam.

We might begin witnessing more small exchanges doing exit scams if the bear market extends out longer.

Also, do not trade in small and unknown exchanges.

Read in full https://beincrypto.com/quadrigacx-saga-human-tragedy-or-yet-another-exit-scam/

People should follow this, I don't know why people go for every exchange! Last year, we have seen many exchanges ICO came up and then they vanish. I haven't found any new exchange doing well this year. Even Forkdelta, Etherdelta is better than a new good looking exchange!

o_e_l_e_o

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Quote from: 24Kt on February 12, 2019, 05:32:52 PM

A legit company will not authorize only one person to hold vital info and passwords.

He was the sole owner of the company, and everyone else who worked for it was his employer. As it is a private company 100% under his control, he can do whatever he wants with it. If he wants to hold all the logins, passwords, funds, private keys, and whatever else himself with no back ups, then he can. Is it stupid? Absolutely, but that doesn't stop him from doing it. I wouldn't be surprised if there are other exchanges out there with similarly stupid set ups for holding their users' funds.

24Kt

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Quote from: rdbase on February 07, 2019, 12:14:51 AM

There are two threads about it since it was announced late last month about the possibility of an exit scam by the exchange.
https://bitcointalksearch.org/topic/crypto-exchange-quadrigacx-missing-145-mln-after-death-of-founder-5105266 & https://bitcointalksearch.org/topic/unofficial-quadriga-cx-thread-984498
Where there is a video I posted that uncovers even more about a second person who might be the one who is behind it or even Cottons death.

Quote from: rdbase on February 06, 2019, 07:06:19 PM

There is a theory he ran another exchange called Midas gold back in 2008 with a guy by the name of Omar Dhalini.
I think they planned this setup and exit all along. Could be Gerald was the fall guy and Omar is the one who has control of the funds by multi-sig wallets. And is just waiting until the heat is off the bitcoin but is moving small amounts of litecoin as others have followed those transactions.
This theory is explained in this video by coinspice.
https://www.youtube.com/watch?v=tiy1K6-mf4s

From details already uncovered the original story is becoming less believable everyday.

Sorry if he's really dead. But what I'm seeing here is a clear exit scam. A legit company will not authorize only one person to hold vital info and passwords. There are others who are responsible on this matter. Just my 2 cents.

figmentofmyass

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Quote from: 1Referee on February 06, 2019, 10:44:57 AM

Quote from: buwaytress on February 06, 2019, 06:54:57 AM

Now if the exchange were insured, like all Japanese licenced ones are... we're seeing a first use case for insured exchanges.

I honestly wouldn't put much thought or hope into that, because insurers are out to do one specific thing, which is making sure that they don't have to cough up any sort of amount, or in the worst case scenario, an amount that's far below that what exchanges are insured for.

they'll pay out according to their executed agreements or they'll fight it out in court. insurance companies don't like costly legal battles any more than paying out claims. there's no reason to assume that insurance will work much differently than for any other industry.

the risk due to irreversibility of thefts should be priced in accordingly, meaning steep premiums. i think we're already seeing the effect of that: coinbase only insures 2% or less of their crypto---whatever is in their hot wallets. https://www.coinbase.com/legal/insurance?locale=en-US

rdbase

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There are two threads about it since it was announced late last month about the possibility of an exit scam by the exchange.
https://bitcointalksearch.org/topic/crypto-exchange-quadrigacx-missing-145-mln-after-death-of-founder-5105266 & https://bitcointalksearch.org/topic/unofficial-quadriga-cx-thread-984498
Where there is a video I posted that uncovers even more about a second person who might be the one who is behind it or even Cottons death.

Quote from: rdbase on February 06, 2019, 07:06:19 PM

There is a theory he ran another exchange called Midas gold back in 2008 with a guy by the name of Omar Dhalini.
I think they planned this setup and exit all along. Could be Gerald was the fall guy and Omar is the one who has control of the funds by multi-sig wallets. And is just waiting until the heat is off the bitcoin but is moving small amounts of litecoin as others have followed those transactions.
This theory is explained in this video by coinspice.
https://www.youtube.com/watch?v=tiy1K6-mf4s

From details already uncovered the original story is becoming less believable everyday.

bbc.reporter

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Quote from: Betwrong on February 06, 2019, 01:04:23 PM

Quote from: Slow death on February 06, 2019, 08:11:49 AM

~
CEO of Canadian Crypto Exchange QuadrigaCX Filed Will 12 Days Before Death

if he did, then he knew he was going to die, so why did not he also take steps to ensure that his clients would not be harmed by his death?

Those were my thoughts too when I was reading the article on Bloomberg. It indeed looks like suspicious behavior.

Regarding whether he actually died or not, of course we can't be 100% sure, but here's what is said in the Jennifer Robertson Affidavit uploaded by Coindesk to scribd:

Source: https://www.scribd.com/document/398721572/Jennifer-Robertson-Affidavit

After researching a bit more I found the Death Certificate shown on various news sites:

I think people from India can enlighten us on whether it's easy or not to fake such things in the country.

I reckon it might be. Also may he rest in peace. However, how very convenient for Gerald Cotten of dying in a region very well known for having a fake death mafia if this was proven not to be an exit scam.

https://www.newsbtc.com/2019/02/06/ceo-who-held-150m-in-crypto-died-in-a-region-known-for-having-a-fake-death-mafia/

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Quote from: elda34b on February 06, 2019, 02:31:15 AM

Quote from: blockman on February 06, 2019, 01:56:35 AM

why on Earth they didn't used multisig wallet?

There are a lot of stories, one of them said that Quadriga did in fact used a multisig wallet. But it doesn't matter if they don't have the money in the first place. Lots of people are starting to do their own chain analysis to find out where exactly does Quadriga store their money. Everything related to Cryptocapital sounds very shady now.

Oh that's what some other stories about this incident. I guess some of the evidence are going to come out few days from now. And base on the facts that has been gathered by the posts above looks like some shady activities were part of this incident.

o_e_l_e_o

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The registration of his death appears on the Indian Governments official website, so we can say at least that the certificate is not photoshopped or similar. As gentlemand pointed out though, India is overrun with corruption, and it would not be that difficult to pay off a hospital employee or two to fill in the paperwork and register a death that never happened.

Very suspicious that his last name is spelt wrong on the death certificate. "Cottan" instead of "Cotten". Maybe suggests it was done without him ever registering at the hospital as a patient, which would have resulted in his ID being checked, and instead has been done verbally? Regardless, if this is the death certificate they are using, then legally speaking, Gerald Cotten is not dead. Someone called Gerald Cottan is.

gentlemand

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Quote from: Betwrong on February 06, 2019, 01:04:23 PM

I think people from India can enlighten us on whether it's easy or not to fake such things in the country.

Many Indians are broke. Fat Westerners are not. India is one of the most corrupt countries in the world. One study said 92% of Indians have had bribes demanded at some point from public servants. If he'd carked it in Switzerland it would be rather more convincing.

https://timesofindia.indiatimes.com/Want-a-fake-death-certificate/articleshow/3218280.cms

pixie85

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Quote from: Betwrong on February 06, 2019, 01:04:23 PM

Regarding whether he actually died or not, of course we can't be 100% sure, but here's what is said in the Jennifer Robertson Affidavit uploaded by Coindesk to scribd:

She's obviously lying. If he really submitted his will a week before his actual death there's high probability they were talking about death with his wife and that he told her about private keys.
I think they are blaming it on the dead man because it can't hurt him in his grave and taking all the money.

Betwrong

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Quote from: Slow death on February 06, 2019, 08:11:49 AM

~
CEO of Canadian Crypto Exchange QuadrigaCX Filed Will 12 Days Before Death

if he did, then he knew he was going to die, so why did not he also take steps to ensure that his clients would not be harmed by his death?

Those were my thoughts too when I was reading the article on Bloomberg. It indeed looks like suspicious behavior.

Regarding whether he actually died or not, of course we can't be 100% sure, but here's what is said in the Jennifer Robertson Affidavit uploaded by Coindesk to scribd:

Source: https://www.scribd.com/document/398721572/Jennifer-Robertson-Affidavit

After researching a bit more I found the Death Certificate shown on various news sites:

I think people from India can enlighten us on whether it's easy or not to fake such things in the country.

1Referee

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Quote from: buwaytress on February 06, 2019, 06:54:57 AM

Now if the exchange were insured, like all Japanese licenced ones are... we're seeing a first use case for insured exchanges.

I honestly wouldn't put much thought or hope into that, because insurers are out to do one specific thing, which is making sure that they don't have to cough up any sort of amount, or in the worst case scenario, an amount that's far below that what exchanges are insured for.

We're not talking about a couple of thousand dollars here, but dozens of millions, and in some cases even hundreds of millions. With how one exchange goes bust after the other, I'm not sure how willing insurers are to dig deep into their pockets.

I hope that we're not going to see another hack/scam, but if history repeats, and I strongly believe it will repeat, we'll see how these insured exchanges will respond to that situation.

Japinat

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Quote from: blockman on February 06, 2019, 01:56:35 AM

I'm not familiar with QuadrigaCX until it was on the news with some bad exposee that the owner was totally dead.

Me either, because it's not popular in the forum, most people are using the top volume exchanges.

Quote from: blockman on February 06, 2019, 01:56:35 AM

I don't have 100% source that the owner is totally dead. I have read some comments that it truly might be an exit scam and they haven't shown an actual proof that guy was caught dead.

It should be a big explaining to do by the team if the founder is not really dead.
And I don't think they will risk themselves covering this possible crime and face jail time in the future, and when the address
can be identified, I think anyone can monitor that and if there's any movement, it could make them liable.

Quote from: blockman on February 06, 2019, 01:56:35 AM

I hope that this case wouldn't be the same as Mt.Gox. It's a lot of money that they have locked and why on Earth they didn't used multisig wallet?

Now, it's not a lot compared to the past scams as this market had experience some significant growth.

Slow death

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Quote from: bbc.reporter on February 06, 2019, 12:14:08 AM

[...]

This is a story that poses another great challenge to the crypto world:

- how can the exchange users protect themselves in the event that the exchanges owners die?

Quote from: https://cointelegraph.com/news/ceo-of-canadian-crypto-exchange-quadrigacx-filed-will-12-days-before-death

Gerald Cotten, the recently deceased CEO of major Canadian crypto exchange QuadrigaCX, had filed a will 12 days before his death, Bloomberg writes Tuesday, Feb. 5.

According to the documents obtained by Bloomberg, Cotten signed his last will and testament on Nov. 27, 2018. He mentioned his wife, Jennifer Robertson, as the only beneficiary and the executor to his estate.

Bloomberg has learned that Robertson will inherit several properties in Nova Scotia, where the couple lived, and in Kelowna, British Columbia, as well as a Lexus, a Jeanneau 51 yacht, an airplane and his two pet chihuahuas.

CEO of Canadian Crypto Exchange QuadrigaCX Filed Will 12 Days Before Death

if he did, then he knew he was going to die, so why did not he also take steps to ensure that his clients would not be harmed by his death?

aoluain

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I read this story yesterday and TBH I'm not surprised, this exchange
isn't the first and certainly wont be the last.

As a lot of people have pulled out of crypto, particularly newbies who
god burned last year there are a lot of exchanges trying to service
a substantially reduced amount of business and some have to be hurting
like o_e_l_e_o states above.

Insuring and licencing exchanges does give more user protection but
we also need to recognise that we are trusting others with our funds
and certain degrees of regulation can actually help.

buwaytress

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On the point of not using smaller exchanges - that's a matter of preference. I actually thought guys like Quadriga and Cryptopia ought to be applauded for trying to go neck to neck with the big guns. Don't for a moment believe that it's only the big guys who practise good security (you remember Mt Gox of course). If anything, a smaller group of people with enough technical knowledge and commitment to do good, will be the ones practising proper security measures.

On the note of exit scam, I won't dismiss it. Death in December and only outed now? And an exchange only leaving everything in the hands of a CEO? Surely this can't be how even the most unprofessional firms operate? Totally agree with figmentofmyass: exit scamming looking so, so tempting. Especially when there aren't repercussions.

Now if the exchange were insured, like all Japanese licenced ones are... we're seeing a first use case for insured exchanges.

Kemarit

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Quote from: bustedsynx on February 06, 2019, 03:55:52 AM

LMAO. With the exchange founder's sudden death, it couldn't have been a more perfect excuse to exit scam. Maybe they were already having liquidity problems and see the death as a perfect excuse. Like come on, who doesn't store backups for millions of dollars.

LMAO, this is turning like a circus act and as the story deepens, more and more information surfaces that may lead that indeed this was a exit scam pulled out by the founder of the company. Yeah, liquidity problems but he don't want to get busted, so he carefully plot something and come up with a perfect excuse - death, LOL.

bustedsynx

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LMAO. With the exchange founder's sudden death, it couldn't have been a more perfect excuse to exit scam. Maybe they were already having liquidity problems and see the death as a perfect excuse. Like come on, who doesn't store backups for millions of dollars.

Topic: [2019-02-06] Locked bitcoins in QuadrigaCX might be another exit scam. - page 3. (Read 609 times)