New Reports Says QuadrigaCX Is Linked Directly to Money Laundering Activity with Liberty Reserve

The QuadrigaCX case may have been recommended for bankruptcy proceedings, but it looks like there is still much left to their tale to unfold. To give a little background for anyone that has not followed along so far, the ability to withdraw from this exchange has been a concern since early 2018. However, when Gerald Cotten was reported to have passed in December 2018, the trouble got worse.

After several weeks of attempting to sift through the information left behind, widow Jennifer Robertson, who was left with all of Cotten’s estate, requested and was granted creditor protection. The protection allowed the company, along with a court-appointed monitor, to look for the funds that were missing, allegedly held in cold wallets. There have been plenty of rumors about where these funds reside, though there’s been multiple platforms to come forward that are willing to send back the funds that originated in QuadrigaCX’s exchange.

Now, even though it seemed like bankruptcy would literally just tie up this platform with a neat little bow, there’s clearly more to the story. In an article by Amy Castor, the writer found information from Reddit user “QCXINT” on the activity of Cotten, suggesting that he was involved with co-founder Michael Patryn with Midas Gold. Midas Gold, which is an exchanger with Liberty Reserve, was created by Patryn 11 years ago.

There have already been multiple reports on Patryn as well, saying that his former name was Omar Dhanini and that he was convicted for his connections with an identity theft ring in 2004 when he was 20 years old. He functioned as the moderator for, and he would offer a money laundering service for electronic funds. The fees were high at 10% of the total transaction, but the money would be moved as e-gold, which was an early digital currency that was entirely centralized.

After serving 18 months in jail and getting out in 2007, Patryn had to leave the United States and moved to Canada. By April 2008, he had already established Midas Gold Exchange under the name Omar Patryn, which had launched a digital currency exchange as a service on in January already. The earliest entry on the website showed that the project had launched, and that all orders were directed through the Contact Us page.

The page does not mention anyone, but an entry in October the following year suggested that there was a lot of activity happening. The post apologized for “the delays experienced for many clients” in that week. It stated that the company was going through “massive corporate restructuring and that there were some services disabled while the adjustments were being made. At the time, users had access to E-Gold, HD-Money, WebMoney, WMZ E-Currency, and AlterGold E-Currency. They even allowed for acceptance of Bitcoin in the summer of 2011, but it was clear that the main source of revenue was Liberty Reserve.

Liberty Reserve, comparatively, was like PayPal for criminals trying to hide their actions. Transactions could be performed anonymously with the LR digital currency, worth $1 each, and could be sent to anyone else on the platform. It was eventually shut down by the US government in 2013, but not before serving millions of users worldwide.

The only piece of information that consumers even needed to register was an email address. Names, addresses, and other personal details could be falsified because they did not bother to validate anyone’s true identity, but funding directly was not an option. Instead, the user would need to perform their interactions through a third-party exchange, like M-Gold. Even cashing out required the same type of protocols.

Since this setup make it possible for LRs to be purchased in bulk by the exchanger, Liberty Reserve didn’t have to collect any banking information. However, during a court exhibit, a data dump has exposed an interesting factor in the QuadrigaCX case. When Liberty Reserve was being taken down, the data showed that Midas Gold was #342 out of 500 accounts, based on volume. Though the account name was Omar Patryn, the email account registered was [email protected], which means whoever had access to this email had the ability to operate the account that was linked with Liberty Reserve. Anything from authorizing transactions to changing the password could be done with this account.

Considering the email address and the owner listed, it is possible that Cotten and Patryn were both involved with, though there is not any sign if the collaboration was from the beginning or not. Of course, the question of whether that was actually Cotten’s email address comes up, which is entirely possible. The same email address was used for registering with,, and others. The email is even linked to Quadriga Fintech Solutions, which operates QuadrigaCX.

Ultimately, in May 2013, the founder of Liberty Reserve was arrested in Spain, due to a massive money laundering effort. The website was seized within days, and the US authorities decided to seize another 30 domains, which included the website. The court documents stated that

“the defendant domain names were used to fund Liberty Reserve’s operations; without them, there would not have been money for Liberty Reserve to launder.”

Even though Liberty Reserve had over 5 million registered accounts, only 50 individuals showed up by April 2016 to gain back their funds. Considering the business with money laundering, the courts asked that the accounts with legitimate business activity to contact them to receive their funds.

Is it a coincidence that, within months of the seizure of, QuadrigaCX launched their beta? Perhaps. However, it could be that it just took a few months to resurrect the scam too. Still, there are a few puzzle pieces left that do not fit. Patryn claims to have left Quadriga about three years before the exchange collapsed, preceding both Cotten’s death and the collapse of the exchange.

Patryn has consistently stated that he’s remained uninvolved since then, adding that he did not agree with the stop in the public listing process that Cotten implemented. Based on the statements of former regulatory attorney for QuadrigaCX Christine Duhaime, this decision is what ended the responsible accounting that the platform had held until that point.

Presently, there has yet to be any confirmation of how deeply Cotten was involved, considering that the connection between all of these activities has not been made before.

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