5 Suspicious Factors about Bitcoin Exchange QuadrigaCX and its $150m in Missing Crypto

By: P. H. Madore

Questions continue to swirl about Bitcoin exchange QuadrigaCX and its $150 million in missing crypto funds. | Source: Shutterstock

Bloomberg just reported that QuadrigaCX CEO and founder Gerald Cotten legally changed his will just 12 days before his death on December 9. This fact is just the latest in a string of interesting elements regarding the Canadian Bitcoin exchange’s sudden closure and supposed $150 million in missing crypto funds. Here is a run-down of what we know — and don’t know — so far.

1. Rumors that Co-Founder Michael Patryn Might Be Convicted Identity Thief Omar Dhanani

For over a year, suspicions have circulated that Michael Patryn might actually be a famously convicted scammer by the name of Omar Dhanani. Dhanani was a member of the Shadowcrew and plead guilty to numerous counts of identity fraud back in 2005.

According to lawyer Stephen Palley, Dhanani also used the name Omar Patryn in a forfeiture case. Omar Patryn was also a name used to start a company called Midas Gold Exchange.

Again, these allegations have not been definitely proven. However, Palley added on Twitter:

“If we were in front of a jury, with just this, and the burden was preponderance of the evidence — hard to imagine a jury concluding anything other than that the two people are one and the same, in my personal opinion.”

At a minimum, having an identity thief in the upper echelons of a company that handles people’s personal and financial information is a major problem. QuadrigaCX repeatedly claimed a year ago that Michael Patryn had left the company years before. Nevertheless, the information and proper divulging of it might have foreshadowed the eventual problems the exchange faced. Clearly, not all is well with a company that has such things going on.

2. Past Banking Problems

bitcoin break piggy bank
This isn’t the first time QuadrigaCX has run into trouble. | Source: Shutterstock

Back in October, the Canadian Imperial Bank of Commerce froze around $22 million in QuadrigaCX funds. The bank claimed it was unable to ascertain the real ownership of the money.

The bank began having issues with QuadrigaCX when several bank wires were recalled.

CIBC was unsure if it should return the money or not, while at the same time it couldn’t be sure if all of the money in the account belonged to Quadriga. It therefore sought help from the courts to determine the best course of action, according to the Globe and Mail.

“CIBC says in court documents that it had received wire recalls from seven of the 388 depositors and was not sure whether to honour the requests. CIBC says it tried to investigate, but was not able to resolve the matter. As a result, the bank is seeking what is known as an “interpleader order,” which would allow it to pay the money into court and have the justice system decide where it should go.”

3. Whether the $150 Million in ‘Missing’ Crypto Actually Exists

As CCN.com reported over the last week, it’s unclear whether QuadrigaCX actually possessed $150 million in crypto at the time of its closure and/or Cotten’s death. Blockchain analysts have released inconclusive reports, but so far no one has found evidence that the exchange was solvent. Taylor Monahan says that her investigation found that the company definitely didn’t possess a significant enough amount of Ethereum to make it liquid.

Worse, a lot of the funds seem to have moved to external exchanges. If the movements tracked by various blockchain analysts aren’t suspicious, we don’t know what is.

4. Bitcoin Exchange’s Month-Long Silence Following Founder’s Death

According to a death certificate with a misspelling of Cotten’s name, Gerald Cotten passed away on December 9 in India. His wife claims he was opening an orphanage at the time. Without regard to that, over a full month went by before the exchange began to falter and Cotten’s death was announced by the Bitcoin exchange.

It’s not surprising that officials in India might have misspelled a Western name. This reporter has repeatedly misspelled Cotten’s name, confusing it for the way that Senator Tom Cotton’s name is spelled.

All the same, the length of time between the death of the CEO and the announcement is suspicious. That it coincides with the faltering of the exchange is even more interesting. The crypto exchange suddenly needs funds that it didn’t need for a month previous to remain solvent? And nobody gets anything as a result?

Indeed, the whole story has yet to be told.

5. Crypto Exec. Gerald Cotten Altered Will Less Than 2 Weeks Before Death

It’s probably common to update your will before going to a foreign country, if you have significant assets. There are several ways to make sure your loved ones can have access to your documents. One is to keep a copy of a master password with access to more important information with your attorney. Another is to trust them while you are alive.

Reportedly, Cotten’s laptop has been difficult to get into. If the funds actually exist, it would seem the founder is more cautious than some examples we’ve seen in the crypto community, like the crypto payments firm employee who sent $5 million in Bitcoin out by accident.

Nevertheless, traces of Cotten’s digital life are few and far between. His LinkedIn profile is no longer active. We wonder if someone had access to that. And if so, what else has he/she/they had access to?

Everything will come out in the wash. The case brings to mind the mysterious disappearance BitConnect exec John Bigatton’s wife. She disappeared without a trace as the walls came crashing down around Bigatton, leaving open the possibility that she is somewhere off-shore holding funds for Bigatton.

Featured Image from Shutterstock

P. H. Madore has written for CCN since 2014. Please send breaking news tips or requests for an investigation to bitillionaire+phm@gmail.com. He lives in Maine, USA. A single father of four young children, he does not discourage financial donations, provided they do not come with strings attached.