Canadian cryptocurrency exchange QuadrigaCX has been through a tough year by all standards, but the company’s woes have continued till now. As the BBC reported yesterday, attorneys representing the now-defunct exchange’s users have sought to exhume the body of deceased chief executive Gerald Cotten, as fresh doubts seem to have risen about the circumstances of his death.
— Spiros Margaris (@SpirosMargaris) December 15, 2019
While Cotten was alive, he was the only person who had access to the exchange’s cold wallets, although no one was aware of this lap in security. Unfortunately for the company and its customers, the chief executive died last December, as he suffered severe complications related to Chron’s disease while he was on vacation in India.
Cotten’s Death Left Quadriga Stranded
At the time, the exchange’s cold wallets contained the vast majority of funds in its possession- up to $150 million in cryptocurrencies. In that time, the exchange has ceased operations, while its executives and customers have gone through several means to recover the funds. Up to this point, however, none of these methods have proven to be successful.
As expected, the mysterious nature of Cotten’s death has caused several conspiracy theories about what really happened, as people have now questioned whether he actually died and didn’t just pull off what cud be the biggest exit scam in the history of the crypto industry.
As the BBC explained, Miller Thomson LP- the law firm representing the exchange’s disgruntled customers- have now written to the Royal Canadian Mounted Police, asking that they “conduct an exhumation and post-mortem autopsy on the body of Gerald Cotten to confirm both its identity and the cause of death given the questionable circumstances”.
Explaining why they would like to have this process conducted, the law firm reportedly provided some background information to the Mounted Police on the company’s history, which included Cotten and others who have affiliations to the firm.
He Wasn’t Clean While Alive
It is a bit understandable that the users would request confirmation that Cotten is truly dead. Apart from the fact that the company suffered a significant lapse in ownership quality and responsibility, the death of the former exchange boss also revealed a lot about him, as well as how he ran his business.
In June 2019, Ernst & Young (EY), the auditing firm that was appointed as the bankruptcy trustee of the exchange, revealed in its fifth report to the Supreme Court of Nova Scotia that Quadriga’s operations were “significantly flawed from a financial reporting and operational control perspective.” As the auditing giant put it, Cotten never segregated his duties from basic internal controls, and the company’s assets were grouped with user funds.
EY also noted that Cotten created several fake “identified” accounts on his exchange under several aliases, where he deposited unsupported assets and used them to trade on the platform. By doing this, he was able to inflate revenue numbers and create fake trading activity on the platform.
Cotten also reportedly traded on other exchanges, leaving his company to pick up the tab on his losses.