Quadriga Wallets are Empty $137 Million Missing

Karan Balwani

March 7, 2019 3:27 pm

Quadriga Wallets are Empty $137 Million Missing
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QuadrigaCX is a cryptocurrency exchange which came under a lot of heat recently. The cryptocurrencies held by the exchange was locked away as per the management. This resulted in users being unable to access their crypto holdings. Recently, when an auditor revealed that the wallets set up by the late CEO Gerald Cotten. It was found that the wallet were empty and were drained back in 2018.

The six “cold wallets” that Quadriga had utilized for storing cryptocurrencies securely were expected to contain millions. The biggest revelation was that the funds from these wallets had already been emptied back in April, which was months before Cotten’s death came to light, “bringing the balances down to nil,” said Ernst & Young, the audit firm.

This news has simply aggravated the problems of the 115,000 Quadriga users who have been unable to withdraw their money, majority of which consists of Bitcoin , from the exchange. To worsen the blow, the auditor also revealed that the company was found to have created around a dozen fake accounts.

The report published by Ernst & Young, that was published to the court stated that only one of these wallet, called as “The Sixth Wallet” was in regular operation after April. It was used to receive Bitcoin from another cryptocurrency exchange and then to transfer that Bitcoin to Quadriga’s “hot wallet” for quick-turnaround withdrawals and payments.

It was enquired that why did the company stop the deposit of bitcoin into its cold wallet last spring, and the representatives were unable to furnish an explanation. The auditing firm is researching on any external accounts that the exchange might be using with any other cryptocurrency exchange.

Another discovery was that 14 user accounts were “created outside the normal process by Quadriga”, probably by means of aliases and bogus funding. The founder Cotten passed away back in December at the age of 30. The password to his laptop, which was used to handle majority of the exchange’s business was not recovered.

His widow, Jennifer Robertson announced in January that the company was looking for ways to access these digital accounts and wallet to recover the said funds. There has been an outburst on anger and the affected users are voicing their opinions through social media and Reddit. The co-founder of Quadriga, Michael Patryn was found to be using an alias to cover his true identity. 

Based on his records, the Globe and Mail reported that Patryn’s real name is believed to be Omar Dhanani, a former inmate of the U.S. prison who was locked up due to cases of identity theft, credit card fraud and money laundering all the way back in 2004. Based on the court records, he used the alias Omer Patryn and was deported to Canada.

Last month, Patryn told the newspaper that he had severed ties with Quadriga over three years back, after a dispute with Cotten’s decision to not make the company public. He also denied any claims on hiding his identity, demanding to see an attorney first.

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