The Court Monitor (E&Y) for QuadrigaCX released a new report on March 1st, 2019, that details all of their new findings in the case. For those that do not know, QuadrigaCX is a cryptocurrency exchange that recently became insolvent, allegedly due to the spontaneous and unexpected passing of its owner and CEO, Gerry Cotten.
Since that time (middle to end of January), there has been a flurry of media coverage on the exchange.
In specific, however, Zerononcense has served as the only publication and entity in the cryptocurrency space to publish three comprehensive blockchain reports, which cover QuadrigaCX’s Bitcoin and Ethereum funds in-depth.
They are posted below for convenience:
Upon release, these reports received a slew of feedback, both negative and positive. However, as time drew, the feedback became increasingly skeptical and negative.
Some doubted the veracity of the cluster address technique used in the first report. Others doubted whether the author possessed the capability to accurately pinpoint addresses belonging to QuadrigaCX or whether the reports’ author possessed enough credibility to be taken at face value with these findings.
Fortunately, however, the Court Monitor’s most recent report (released March 1st, 2019), puts these worries to rest by confirming the vast majority of the findings within these three reports.
Reviewing the Findings in the Court Monitor Report That Confirms Information in the Zerononcense Blockchain Reports
The Monitor’s report contains a slew of exposition about the case and its efforts to secure various funds belonging to QuadrigaCX as well as pertinent information from disparate sources. The Monitor also details its efforts to seek information and/or potential funds from third-party payment processors as well.
Most notably, however, there is a substantial amount of information from the Court Monitor regarding the whereabouts of QuadrigaCX’s cryptocurrency holdings. This also happens to be the subject of the three reports that were posted above.
Revelation #1 in the Court Monitor Report That Confirms Zerononcense Blockchain Analysis
Below is the first statement made by the Court Monitor in the report in relation to QCX’s Crypto Funds:
In specific, the statement reads, “In addition to securing funds, the Monitor has made efforts to preserve any cryptocurrency that may be available to the Applicants’ stakeholders. Together with the Applicants’ representatives, the Monitor identified potential other exchanges where Quadriga and/or Gerry Cotten may have opened accounts. The Monitor wrote to fourteen (14) exchanges requesting account credentials and transaction information for any accounts that may have been opened by Quadriga or Gerry Cotten.”
The above statement is pretty astronomical, because it essentially corroborates what was written in the third report: https://blog.zerononcense.com/2019/02/28/quadrigacx-ethereum-storage-found
Below is an excerpt from the third blockchain analysis by Zerononcense:
Revelation #2 in the Court Monitor Report That Confirms Zerononcense Blockchain Analysis
The Monitor’s report continues by stating:
In the above screenshot, the Monitor states, “The Monitor has received responses from four (4) cryptocurrency exchanges to date. Certain of the cryptocurrency exchanges confirmed the existence of accounts opened by Quadriga or Gerry Cotten and provided transactional data in respect of such accounts. One cryptocurrency exchange was holding minimal cryptocurrency on behalf of Quadriga which the Applicants successfully arranged to have transferred to the Monitor. Counsel to Ms. Robertson in her capacity as executor of the estate of Mr. Cotten has advised the Monitor that Ms. Robertson has agreed that all cryptocurrency found in accounts in Mr. Cotten’s personal name may be transferred to Quadriga for the benefit of its stakeholders.”
This, too, confirms the conclusion formed in the Ethereum blockchain analysis by Zerononcense.
The confirming statement can be found below:
As one can see in the screenshot above, the definitive assertion that QuadrigaCX/Gerry Cotten does hold cryptocurrency accounts at outside exchanges was confirmed in the Monitor Report.
In addition, the assertion that the funds could be returned once identified was confirmed as well, per the Monitor Report.
Revelation #3 in the Court Monitor Report That Confirms Zerononcense Blockchain Analysis
The Court Monitor Wrote:
In the above screenshots, the Monitor states:
“Most cryptocurrency exchanges typically follow a similar structure in which when a user opens an account, the user is provided with a hot wallet address (the “User Wallet”) to which the user may send cryptocurrency to be received by the exchange. The User Wallet address is typically (although not always) an address that is set up unique for a single user. The user’s access only allows for transfer to that address. Following depositing cryptocurrency in the User Wallet, the user does not have direct control over the balance and the exchange has custody of the deposited cryptocurrency.
Upon receiving cryptocurrency in a User Wallet, the exchange credits the user’s exchange platform account with the corresponding quantity of cryptocurrency. The exchange then controls the cryptocurrency in the User Wallet, typically pooling the cryptocurrency deposited by users and moving the cryptocurrency to wallets, both hot and cold, under the exchange’s control. With account balances users can place orders for either other cryptocurrency or traditional currency (“fiat”). When a user ultimately wants to make a withdrawal of cryptocurrency from their account with the exchange, the user provides instructions to the exchange to send cryptocurrency to a specified wallet outside the exchange’s control. The exchange will access its cryptocurrency pooled reserves to fulfill the transaction. Similarly, if a user wants to withdraw fiat, the user would provide bank account or address information to the exchange. The Monitor understands that Quadriga was generally set up to operate in this manner, however, the Monitor has not yet had direct access to Quadriga’s exchange platform to confirm.”
Zerononcense Blockchain Report #3 Contains This EXACT Information
These statements, again, directly corroborate was written in the third Zerononcense blockchain analysis report.
Below are screenshots from the article where this was stated explicitly:
As one can see, the Court Monitor report almost stated what was in the Zerononcense report, verbatim.
Revelation #4 in the Court Monitor Report That Confirms Zerononcense Blockchain Analysis
Court Monitor Reveals All of QuadrigaCX’s Cold Wallets
This next portion is perhaps one of the most important parts of the entire report:
In specific, the above screenshots reads:
“The Applicants identified to the Monitor six (6) cold wallet addresses which Quadriga used in the past to secure bitcoin (the “Identified Bitcoin Cold Wallets”), the primary cryptocurrency traded on the Quadriga platform. The addresses of the Identified Bitcoin Cold Wallets identified by the Applicants are as follows:
( c ) 1ECUQLuioJbFZAQchcZq9pggd4EwcpuANe
(f) 1JZJaDDC44DCKLnezDsbW43Zf8LspCKBYP (the “Sixth Bitcoin Wallet”)”
Zerononcense is the Only Entity That Identified SIX Cold Wallets for QuadrigaCX
Approximately two weeks ago, QuadrigaCX announced (via the Court Monitor), that they had ‘accidentally’ sent 103 bitcoins to cold wallets that they no longer had control over.
Soon after this announcement, CoinDesk posted an article alleging that ‘all of the cold wallet addresses’ had been found:
Blockchain Analysis Ties 5 Bitcoin Addresses to QuadrigaCX Exchange – CoinDesk
Blockchain watchers have identified a group of bitcoin addresses that likely belong to one of the so-called cold…www.coindesk.com
In specific, they listed the following addresses:
1HyYMMCdCcHnfjwMW2jE4cv9qVkVDFUzVa — received 36.37786282 BTC,
1JPtxSGoekZfLQeYAWkbhBhkr2VEDADHZB — received 33.19556316 BTC,
1MhgmGaHwLAvvKVyFvy6zy9pRQFXaxwE9M — received 19.54328527 BTC,
1ECUQLuioJbFZAQchcZq9pggd4EwcpuANe — received 10.34268585 BTC,
1J9Fqc3TicNoy1Y7tgmhQznWrP5AVLXj9R — received 4.87560516 BTC.
The sixth address (1JZJaDDC44DCKLnezDsbW43Zf8LspCKBYP) was only identified by Zerononcense.
The discovery was made in this report: https://blog.zerononcense.com/2019/02/16/report-shows-quadrigacx-cold-wallets-actively-involved-in-significant-criminal-activity-ties-to-silk-road-hacked-funds-identity-theft-and-drug-human-trafficking
Below are screenshots identifying these findings:
The statements above make it more than clear that the author was able to positively identify the 6th wallet (with the assistance of the Trinide blockchain firm).
Revelation #5 in the Court Monitor Report That Confirms Zerononcense Blockchain Analysis
The Monitor’s Report Also States:
Above, the report states, “The Monitor understands that prior to the Filing Date, the Applicants made significant efforts to identify and locate any additional cold wallet addresses or other wallet addresses that may contain cryptocurrency reserves. However, to date, the Applicants have not been able to identify any other wallet addresses that may have been used to store reserves of bitcoin or other cryptocurrencies. The Monitor continues to work with representatives of the Applicants and internal blockchain resources to determine if any other cold wallet addresses or other wallet addresses with cryptocurrency reserves exist.”
Of course, this corroborates what was posted in the first blockchain analysis by Zerononcense, which is that QuadrigaCX possessed no wallets with excess reserves in them.
Revelation #6 in the Court Monitor Report That Confirms Zerononcense Blockchain Analysis
The Monitor Report Stated:
Specifically, the report states, “Certain of the bitcoin in the Identified Bitcoin Cold Wallets appear to have been transferred to accounts at other cryptocurrency exchanges. As set out at paragraph 38 of the Third Report it is not possible to ascertain with absolute certainty from public information who the owner of an address is, however, the tools and sources utilized by the Monitor indicate that certain receiving wallet addresses from transactions in the Identified Bitcoin Cold Wallets are wallet addresses associated with identifiable cryptocurrency exchanges. As indicated above, the Monitor has reached out to various cryptocurrency exchanges to identify possible accounts controlled by Quadriga or Mr. Cotten to receive transactional information in respect of any such accounts.”
This Information Confirms Zerononcense Blockchain Report #2 (Which Also Positively Identified ALL Bitcoin ‘Cold’ Wallets for QuadrigaCX)
This strongly corroborates information included in the second blockchain analysis by Zerononcense.
Below are screenshots from this report showing the outflow of currency leading to other cryptocurrency exchanges:
Revelation #6 in the Court Monitor Report That [Potentially] Confirms Zerononcense Blockchain Analysis
While this next portion of the report does not explicitly report what has been covered by Zerononcense thus far, there are a number of details provided that strongly corroborate what was written in the most recent blockchain analysis report: https://blog.zerononcense.com/2019/02/28/quadrigacx-ethereum-storage-found
The Monitor Report Stated:
Looking Deeper into the Third Blockchain Analysis by Zerononcense
Although there are only 12 addresses listed above, it is worth noting that these addresses were transferring and receiving a significant amount of cryptocurrency to and from QuadrigaCX’s exchange in a seemingly inexplicable manner.
As stated above, Zerononcense was able to confirm that the cryptocurrency sent from this address had to be QuadrigaCX’s own doing. But the reasons why were largely unknown.
However, with the advent of the latest Court Monitor report, it is not unreasonable to assume that these wallets may have also been used for wash trading, which would explain the transactions going back and forth between these customer deposit addresses and the QuadrigaCX wallet.
Again, this is not confirmed, but definitely worth noting.
MAJOR Revelation #7 in the Court Monitor Report That Confirms Zerononcense Blockchain Analysis
Monitor Report’s Revelation
Below, is the biggest piece of confirming evidence from the Monitor Report
Specifically, the above states, “Representatives of the Applicants [QuadrigaCX] have advised the Monitor that accounts have been identified at three different exchanges that are believed to have been operated by Quadriga or Mr. Cotten. The Monitor has been provided with transaction histories for these accounts. The Monitor understands that the transactional information was obtained by the Applicants as a result of logging onto these accounts using credentials found in Mr. Cotten’s emails or other internal Quadriga emails or records. As mentioned above, blockchain records associated with the Identified Bitcoin Cold Wallets also indicate that certain cryptocurrency under Quadriga’s control was transferred to other exchanges.”
This Information STRONGLY Confirms Zerononcense Blockchain Report #3
Below, are screenshots that specifically point out three major exchanges as the recipients of cryptocurrency from QuadrigaCX (that was manually transferred by QCX):
Its also worth noting that the Monitor’s report states:
It is very possible that the exchange that responded (out of the three) was Kraken.
Many have openly stated, ‘If Kraken had these funds, they would not have launched a contest where the winner can receive $100k if they positively identify where QuadrigaCX’s crypto has gone’.
This is a fair statement. However, it does not invalidate what was discovered in the third blockchain analysis. In fact, it bolsters it because it appears that Kraken did receive funds, realized that they were gone and then subsequently reported this information to the RMCP. They were also probably more than willing to communicate with the Monitor as well.
So, to be clear, the absence of funds at Kraken currently, does not mean funds were never sent there. And more than likely, Kraken has contacted the authorities to notify them of where those funds have gone.
This article was published with a few intentions, which were:
- To establish that the content and research being produced by the Zerononcense platform is legitimate and trustworthy.
- To provide an overview of confirmed facts (thus far).
- To note Zerononcense’s substantial contributions to the QuadrigaCX case up to this point.