The story of QuadrigaCX from the beginning of their problems until now is a long and confusing road, filled with interesting twists and secrets. After the late CEO’s death in December 2018, the company scrambled to make the withdrawals of funds possible, freezing activity in the process. However, after widow Jennifer Robertson failed to provide the investors with adequate access, the company filed for creditor protection as they sorted through the information.
Even though it was just announced today that the company would be getting just under a 45-day extension on the protective order, law enforcement will not wait. According to a press release from Fortune, the Federal Bureau of Investigation and the Royal Canadian Mounted Police are looking into the matter now. So far, the exchange platform has remained unable to retrieve a minimum of $136 million in customer funds, which is predominantly held in cryptocurrency.
Jesse Powell, the CEO of the Kraken crypto exchange, commented that the agencies have been speaking with his own company over the last few weeks, investigating what has happened with the funds. These inquiries are just another stop in the endless drama that QuadrigaCX has been experiencing, starting with the complications with Crohn’s disease that late CEO Gerald Cotten experienced in India, which is believed to be his cause of death. The plot only thickened when the news of the death was announced, and the platform revealed that he was the only holder of the private keys that held customers’ crypto funds.
In an effort to explain this mismanagement, Quadriga basically said that the money was misplaced, which investors were clearly irate about. However, Powell does not believe that the funds were ever actually put in cold storage. Instead, he says that further research on the blockchain shows that the funds were being moved to “hot wallet,” which were found on third-party exchanges.
Aiming to help along the investigation, Kraken is offering a $100,000 bounty for anyone with information about the whereabouts or even the activity of the missing funds. Their efforts were made to help the customers that have experienced this loss, and Powell believes that a positive resolution will reduce the scrutiny that this case is bringing the crypto industry. He also thinks that subpoenas should be issued to other exchanges that may have received qualifying funds from Quadriga.
CoinDesk, one of the many crypto news media websites reporting on this ongoing tale, says that the blockchain records show that Binance, Bitfinex, and Poloniex all potentially received funds. This suggestion becomes even more suspicious when the funds were moved right before the platform collapse.
The compliance team notified Powell of the information from the law enforcement agencies, rather than Powell speaking with them directly. While the scope of the inquiries that the FBI and RCMP are unknown, both entities have stated that they are unable to confirm or deny that an investigation was going on. Quadriga’s lawyer, Richard Niedermayer, added to these comments, saying that he could not comment on any allegations and that he did not have knowledge of any probes involving these government agencies.
The controversy regarding QuadrigaCX has not stopped since before proceedings even began. With changes to the will 12 days before Cotten passed away, millions of dollars were left to Robertson, who was also left responsible for his estate. Investigations into the founding of Quadriga by Globe & Mail stated that Cotten’s co-founder is a convicted felon for his involvement in an identity theft ring within the United States and was involved with a website used for money laundering. During the proceedings, someone transferred 103 Bitcoins into a cold storage wallet “inadvertently,” which basically means that the $500,000 worth of crypto assets is gone.
At this point, nearly every bit of information brought up in the news has been bad for the creditors, and the Quadriga name isn’t exactly reputable. The Globe even contributed a small detail about the location of his death, saying that death certificates are easy to obtain in India. Though the idea that Cotten faked his death is a bit far-fetched, especially considering the grief that his family appeared to endure, it is worth noting that the handlers of his service could not recall seeing his remains.
There have been many players in the crypto space that have attempted their own investigations, though the only case that matters is the one in court and this unconfirmed probe. Powell believes the only way to unearth the true story is by bringing the family, staff, and shareholder together in a massive interrogation until someone is able to give some answers.