Zerononcense, a cryptocurrency blog run by editor James Edwards, claimed that it found the trails of the missing $90 million worth of crypto from the now-defunct exchange QuadrigaCX.
The detailed report curated by Edwards discovered the transfer of 649,708 Ethereum from the wallets of QuadrigaCX to cryptocurrency exchanges including Poloniex, Bitfinex, and Kraken.
Kraken CEO Jesse Powell has said in a statement that Kraken does not have any funds from the wallets of QuadrigaCX.
The research claimed that there is “a high likelihood” of QuadrigaCX funds currently being stored on Bitfinex and Poloniex.
“Based on the cumulative analysis of Taylor Monahan, the CEO of MyCrypto, Elementus, a blockchain research firm that was cited by the Wall Street Journal, and the author of this report, it appears that there is a high likelihood that there are funds that belong to QuadrigaCX at Bitfinex and Poloniex,” the report read.
If the missing funds from QuadrigaCX are on exchanges, then the funds of users are recoverable. Also, it could disprove the narrative that the exchange can no longer access user funds because its CEO with sole control over user funds passed away.
But, it cannot be said definitively that the funds spotted from the report are currently on the three exchanges because the funds could have moved out since.
Moreover, it will require an extensive investigation to ensure that the trail of funds is in fact exclusively connected to QuadrigaCX and not the users or other relevant individuals from the exchange.
According to the research, final transactions from the suspected Ethereum wallet of QuadrigaCX were initiated on Dec 8, 2018, less than 24 hours after QuadrigaCX CEO Gerald Cotten reportedly passed away in India.
The research read:
The date of the last outgoing transaction for the following wallets is of interest in these cases because Gerry Cotten died on December 9th, 2018.
Thus, the cease of further activity in the wallets above appear to corroborate the idea that Gerry Cotten was indeed the manager of QuadrigaCX’s assets and that his sudden death led to a cease in activity.
Hence, if the wallets were operated by QuadrigaCX and the funds potentially moved out of the exchange after December 9, the argument that the exchange lost control of user funds due to the death of the CEO cannot hold.
Jesse Powell, the CEO of Kraken, said that it is in the best interest of the creditors of QuadrigaCX that the lost funds are on exchanges because if that is the case, the funds can be recovered.
“This is the best hope that QuadrigaCX clients have — that Cotten was keeping client funds in other exchanges. Unfortunately, nothing at Kraken. Hopefully, others are looking. Could be accounts were created under different names so might take some real digging to find,” said Powell.
“Any exchange can look up the addresses in the report and see if any match deposit/withdraw addresses of their clients, then they need to investigate whether those clients are affiliated with QCX (beyond just having an account there).
As previously suggested by MyCrypto CEO Taylor Monahan, QuadrigaCX had the ability to create fake accounts across exchanges using the information of their existing users.
While no evidence of such activity has been found, there exists a possibility that illegitimate accounts have been created on exchanges, which could be difficult for exchanges to crack down.
“Oh, and just in case you weren’t shaking your head enough, don’t forget that Quadriga ran an exchange with KYC. They have a pile of user’s KYC data. They could turn around and open an exchange account with any of that KYC data to move money.”
On March 1, Kraken offered $100,000 to anyone who finds the missing $190 million of user funds QuadrigaCX reportedly lost, $150 million in which are stored in crypto.
Kraken is running a full investigation and a group of independent researchers is conducting an analysis of wallets potentially connected to QuadrigaCX, putting the QuadrigaCX case a step closer towards being cracked.