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Yesterday I retweeted a tweet which linked to an article about QuadrigaCX and how it apparently lost $150 million in cryptocurrencies. The article mentioned that the lost funds were because the founder (Gerry Cotten) of the company died and he was the only one with the passwords to the wallets. While that is an incredible case of negligence, it didn’t seem (at the time) that it anything nefarious was going on. All of that has changed now, though. 

Thanks to research by a crypto and blockchain analysis expert, who has published their findings on Medium, it appears that QuadrigaCX hasn’t been completely truthful, to the say the very least.

Here’s some of the findings

It appears that there are no identifiable $BTC cold wallet reserves for QuadrigaCX. The author tracked back several dozen wallet addresses from verified deposits and withdrawals initiated by customers and none sourced to any vast source of Bitcoin owned by QuadrigaCX.

It also appears that QuadrigaCX was using deposits from their customers to pay other customers once they requested their withdrawals – explaining crypto withdrawal delays at times. This phenomenon became much more frequent toward the end of ’18. That sounds like a ponzi scheme if you ask me.

It does not appear that QuadrigaCX ever lost access to their Bitcoin holdings. In fact, there’s pretty indisputable proof that they have access to any and all Bitcoins in their possession currently.

While the author makes no determination whether Gerry Cotten is actually dead, he does open up the possibility that he may not be. The assertion by QCX that Gerry’s death undermined their ability to access crypto funds means we should not see any movement out of their wallets after Dec. 9th (date of his alleged death according to QCX).

There are also some other weird things that were noticed. For example, there is a cluster address where QCX and an address associated with Mt. Gox liquidated over $20M+ combined in the last 7 months. According to the author, they have no clue why or what the money was used for, but they are almost 100% positive it did not go to customers.

The author goes on to say that the parties affected by this should treat it as a theft, not an unfortunate set of circumstances. And I would agree. If you’re a victim here, the evidence is beginning to look overwhelmingly bad and you should consider consulting an attorney.

Nonetheless, definitely check out the research. This will continue to be a story to watch.

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