Canadian Crypto Firm Collapsed Due to Ponzi Scheme by Late Founder, Regulator Says

Written by:
Published on:

TORONTO (Reuters) - Last year’s collapse of Canadian cryptocurrency trading platform Quadriga CX was due to a Ponzi scheme operated by founder Gerald Cotten, who died suddenly in December 2018, the country’s biggest securities regulator said on Thursday.

Cotten died at age 30 from complications of Crohn’s disease while volunteering at an orphanage in India, according to the Facebook page of

Quadriga CX, which announced his death in January 2019.

“What happened at Quadriga was an old-fashioned fraud wrapped in modern technology,” staff at the Ontario Securities Commission (OSC) wrote in a report.

“While public release of an investigative report is rare, we believe the tens of thousands of Ontarians who entrusted Quadriga with their money and crypto assets deserve to know what happened.”

Facing losses when the price of crypto assets changed, Cotten covered the ensuing shortfall with other clients’ deposits, according to the report.

Richard Niedermayer, lawyer for Cotten’s widow, Jennifer Robertson, did not immediately respond to a request for comment.
Some 76,000 investors from Canada and around the world collectively lost at least C$169 million ($124.2 million) from the collapse of Quadriga in 2019, the statement added.

About C$115 million of that was due to Cotten’s fraudulent trading, the regulator said.

When Cotten died, the platform owed approximately C$215 million to clients, according to the OSC. Cotten also siphoned off assets for personal use, transferring about C$24 million to himself and Robertson between May 2016 and January 2018, the report said.

About C$34 million was recovered by the bankruptcy trustee and paid to clients, it said. The trustee also recovered assets from Robertson expected to be worth about C$12 million, and Cotten returned about C$10 million to Quadriga in the months before his death, it said.

Business/Financial News

Jeff Ifrah: US Regulators Odds-On to Approve In-Game Tokens

Jeff Ifrah: US Regulators Odds-On to Approve In-Game Tokens

On this week’s CoinGeek Conversations, we spoke to the Founder of Ifrah Law, Jeff Ifrah as he discussed NFTs, possible US regulations in the Gaming and Cryptocurrency industries.

The Bitcoin White Paper: Timestamp Server

The Bitcoin White Paper: Timestamp Server

Continuing to review the series of dialogues between Dr. Craig S. Wright and Ryan X. Charles, where they discuss the Bitcoin White Paper line-by-line, we come to the section concerning the Timestamp Server. Dr. Wright is the inventor of Bitcoin and the Chief Science officer at nChain while Ryan is the founder of Money Button. 

The Bitcoin White Paper: Stealing Bitcoin

In the video discussion about the second paragraph of the Bitcoin white paper between Dr. Craig S. Wright and Ryan X. Charles, the topic of honesty arose with regards to nodes and the security of the system. While there are a number of security features built in to blockchain, the idea of a rogue or criminal node stealing transactions is thwarted from an economic standpoint.  

The Bitcoin White Paper: Proof of Work and Network

The Bitcoin White Paper: Proof of Work and Network

In a series of YouTube videos, Dr Craig S. Wright and Ryan X. Charles discuss the Bitcoin white paper line by line. Their discussions both clarify the original purpose and intent of Bitcoin as well as inspire additional thoughts about and future uses of it. Having the creator of Bitcoin explain it in his own words certainly clarifies some of the areas that have been misunderstood by many for a very long time. 

The Bitcoin White Paper: Part One

The Bitcoin White Paper: Part One

Who better to discuss the nuances and mapping of Bitcoin with than the creator himself, Dr. Craig S. Wright. That’s exactly what Ryan X. Charles was able to do in an interview discussing the Bitcoin white paper, line by line. It was an opportunity to share with the world in an open discussion Dr. Wright’s creation and vision. Let’s take a look at some of the takeaways from that interview.