9 December 2018 in the Indian city of Jaipur after a second cardiac arrest at the age of 30 years has died the founder of a leading bitcoin exchange QuadrigaCX Canada Gerald Cotten. For a long time he suffered from Crohn’s disease, and in the day of his death was the only holder of the private keys of cold wallets with assets of $137 million At least, so says the official version. ForkLog figured out whether to believe her.
Luxury and Shine
In the summer of 2017 Gerald Cotten purchased the island with an area of 161 acres on the southern coast of Nova Scotia and customized yacht JEANNEAU 51 for $600 thousand. One of the main demands of the young entrepreneur to the vessel was able to reach the Caribbean without having to stop to refuel in Canada or the United States.
On the island Cotten and his wife, Jennifer Robertson has arranged the house, but never moved into it. In just two years the couple and the company Robertson bought 16 properties in canadian cities, Lunenburg, Bedford, Kelowna, calgary and in the elite suburb of Halifax fall river. The total cost of these houses is estimated at $7.5 million Cotten also owned the single-engine Cessna 400 and two cars: Lexus (2017) and Mini Cooper (2015).
The house in the pictures located in Bedford, they belonged to the Robertson — photo CBC
C 2016 Jennifer Robertson began to travel: Oman, Myanmar, Maldives, Dubai, Rio de Janeiro. Judging by her Instagram account, for these purposes, it is often used the private jets. «I’m addicted to travel,» she wrote.
We can assume that things have Cotto at the time was more than good. It would seem, here it is — an incredible success story of the person who is leading your business with a single Macbook Pro.
But the other side of the coin was much darker: after the sudden death of Cotto more than 75 thousand users lost access to their digital assets by $137 million Multiple investigations came to the same conclusion — founder of QuadrigaCX was not who he claimed to be, and his death and all could be staged.
Mystery of the smiling introvert
Cotten’s childhood spent in the small town of Belleville, located between Toronto and Montreal, writes Vanity Fair. His parents owned a small antique shop. The future of bitcoin-entrepreneur was educated in the school of business at York University in Toronto.
House Cotto in Belleville — picture Globe and Mail
In 2013, he moved to Vancouver, where he joined the group of 10 people Vancouver Bitcoin Co-op. They arranged regular meetings, which discussed libertarian values and opportunities that bitcoin offers people in countries with economic crises.
In November of that year Cotten and his partner Michael Patrin launched QuadrigaCX. If earlier residents of Canada had to apply to several banking intermediaries to make money at Mt.Gox, the trading on QuadrigaCX significantly reduced costs. The exchange is allowed to Deposit money in ounces of gold right in the office, where he placed second in the history of Canada cryptomath. The site even had a license AML regulator FinTRAC, which no doubt inspired confidence.
Cotten led the Vancouver Bitcoin Co-op and began to sponsor local conferences and educational events, but avoided the possibility of having friendly relations with someone from the group. Some of his friends at the time told Vanity Fair that, they feel he really believed in bitcoin and bet on the long term.
After the closing of the exchanges CaVirTex and Vault of Satoshi in 2014 QuadrigaCX eventually took a leadership position in Canada, and Cotten even attracted CAD $850 thousand for the exit on a stock exchange. Because of a conflict with one of the investors in the entrepreneur in the end refused from placement of shares, after which the company left the entire Board of Directors. So Cotten was the only employee at the full rate.
Despite the loss of CAD $14 million due to «failure» and freezing of CAD $21 million in Canadian Imperial Bank of Commerce, QuadrigaCX has supported the work for the rally of bitcoin in 2017 and until the death of Cotto.
However, if Cotto in the local community were treated well, his former partner Michael Patrin caused many suspicions. Subsequently, they were justified.
The Patrin appeared in Vancouver out of nowhere and immediately join the Bitcoin Co-op. He constantly confused his country of origin was called then Pakistan, then India, then Italy. Muscular and tattooed, the photos he posed with the raptors and racing cars — the complete opposite of the closed Cotto, whom he considered «my little brother».
After the death of the partner, Patrin had tried to distance himself from QuadrigaCX, claiming that he was only an adviser. But in the Vancouver Bitcoin Co-op said that from day one it was the Patrin spoke about plans to launch a stock exchange and that he was a co-founder along with Cotto.
Version Patrina, with the deceased owner they met about five years ago (2013) online, but it was a lie.
The relationship between Patrin and Cotto was able to track right up to the TalkGold website, which in 2003 moved a variety of financial pyramids.
Dark side of the coin
According to the information shared in the 2000-ies the TalkGold forum was a platform for promoting high-yield investment programs, most of which operated like a Ponzi scheme. On TalkGold you can find tips on the proper construction of financial pyramids, right Akito and other consulting services related to fraud people. US authorities have closed the forum until 2016.
A Globe and Mail investigation revealed that Gerald Cotten registered on TalkGold in the summer of 2003. He was only 15 years old. In the next ten years he made over 2000 posts from different accounts by promoting questionable financial schemes under fictitious names.
Already in 2004 scheme S&S Investments, promising a yield of 150% in 48 hours, landed in trouble when he failed to return the funds at least 235 people.
Gerald Cotten in the second row in the middle, grade 11 photography Globe and Mail
«If I received threats [from investors], I’ll take that as a refusal to pay», wrote the organizer of the scheme, was to e-mail email@example.com. This post, according to the Globe and Mail, belonged to Cotto.
Some members of S&S Investments failed to establish real name Cotto, and he has launched a similar HYIP scheme Lucky-Invest in order to provide payments to victims in the past.
Right before entering the business school in summer 2006 with e-mail, which also belonged to Cotto, wrote a letter to the owner of the other site, promoting investment HYIP. Then future founder of QuadrigaCX ran the scheme United Private Investment Enterprise (U-Pie) and he needed $5000. He suggested that the owner of this website referral bonus of 25% in exchange for advertising.
On TalkGold scheme promoted account under the name Voltaire (Voltaire). In November 2006 in Toronto a small group of investors is U-Pie was found with a young guy who was presented by Dan Manamana from Florida and actually thus Voltaire. According to the description it was very similar to Cotto. U-Pie has suddenly closed in 2007, and the account Voltaire never signs of life.
In the vast TalkGold Cotten and met my future partner Patrin, who have registered on the forum on April 3, 2003. Both are often defended each other in the comments, speaking on a United front against angry «investors».
In 2004, the users of TalkGold put forward the theory that Michael Patrin can be Dhanani Omar, who is serving a prison sentence in the U.S. for the theft of personal data. In the same year, Dhanani was arrested for rendering services for money laundering after being sentenced to 18 months in prison. In 2007, he was deported to Canada, where he changed his name to Omar Patrina, and then Michael Patrina.
Left Omar Dhanani in 2005, right Michael Patrin in 2015 — photo Globe and Mail
In early 2008, the Patrin launched Midas Gold processing for electronic payment systems Liberty Reserve, through which, according to U.S. law enforcement, was carried out major illegal transactions and launder money. One of the contact persons in Midas Gold was specified firstname.lastname@example.org.
In 2013, after the investigation in 17 countries of the US Federal authorities shut down Liberty Reserve in the most large-scale cases of money laundering online. Ceased to exist and Midas Gold that started to accept bitcoin.
Shortly before Cotten allegedly ran another HYIP project, the Quadriga Fund that allegedly invested in venture capital and currency markets. The Quadriga Fund was maintained, and Liberty Reserve, and bitcoin through the processing Patrina.
In late 2013, Cotten began to search for a specialist who could create a platform for buying/selling bitcoins. The vacancy he posted on BlackHatWorld forum. Soon there were exchange QuadrigaCX.
«Private key should be printed and placed in offline storage, say — Bank cell. In this case, nobody can steal your coins unless you decide to Rob a Bank for that,» said Cotten in the podcast «True Bromance» in February 2014. That is, according to him, kept the private keys and QuadrigaCX.
Shortly before his death, Cotten told friends and family members that in case of his untimely demise or disappearance at QuadrigaCX is the mechanism of «hand of a dead man», which will provide them with the necessary access to funds.
27 November 2018, two weeks before the heart stops in Jaipur, he wrote his will. The document stated that all his property, the cost of which is estimated at $9.6 million, will go to a Robertson. A separate paragraph has been said about the digital assets — the wife was entitled to all the passwords of the entrepreneur. Cotten also allocated CAD of $100,000 to care for two dogs of the Chihuahua breed.
Robertson itself is already in the court documents claimed that he never had nothing to work QuadrigaCX and received no access to the users. According to her, only Cotten had access to the private keys.
The death certificate, which was issued in Halifax, dated 12 December 2018, but the reason it is not specified. In a private hospital Fortis Escorts in Jaipur confirmed that Cotten was admitted with septic shock as a result of complications of Crohn’s disease and died after a second cardiac arrest December 9 at 19:26.
However, this version of many users of the exchange have caused serious doubts, because a few months before that, a senior Manager of the operator Fortis Escorts caught on financial fraud, and the Indian testimony last name Cotto was spelled incorrectly.
Indian death certificate Cotto — data CoinDesk
Seemed strange, and the fact that the body for some reason, the hospital was returned to the Oberoi hotel and didn’t want to take back. The embalming procedure was eventually carried out in the local medical College, and on the death of the founder of QuadrigaCX Robertson announced and did a month — in mid-January.
Now suspicious users require the exhumation, because I doubt buried the body really belongs to Cotto. At the same time the investigation was joined by the American FBI.
The money trail
In February 2019 QuadrigaCX asked the court to temporarily protect it from legal claims of creditors in an attempt to find out if he still exchange at least some money to pay and how to access them. The court granted the petition and gave the site a month. Approved auditor company Ernst and Young (EY).
Then the loss was estimated at $137 million in cryptocurrency equivalent of $50 million in Fiat, who for various reasons held by third parties.
During the initial audit found that in early February, QuadrigaCX, dealing with the accounts, by mistake transferred the 103 BTC on a cold wallet, to which nobody had access. EY managed to establish control over the 52 BTC, 0.014 BSV, 33 BCH, 2000 BTG, 800 and 960 LTC ETH. The company also received some personal things Cotto, including four laptop, four mobile phones and three encrypted USB key.
In the research process managed to detect that the hot wallets QuadrigaCX during the period 2 to 8 December, the eve of his death Cotto, on different exchanges brought 9000 ETH. Analyst firm Elementus in February said that QuadrigaCX never had cold wallets for Ethereum. At Elementus came to the conclusion that the courts brought 268 000 ETH to ShapeShift.
In March, representatives EY has announced that they failed to detect 26 350 BTC ($230.5 million as of January 15, 2020) on the cold wallets. The auditor found that from 2016 to 2019 with QuadrigaCX on other exchanges withdrew 9 BTC 450, 387 738 ETH and 239 000 LTС, but did not consider one transaction of 21 BTC 501.
The head of Coinbase Brian Armstrong put forward the version that the liquidity problems at QuadrigaCX could occur long before the death of Cotto, and the user could use the assets in risky business transactions to cover the hole. This assumption in June was partially confirmed and EY: Cotten deduced clients ‘ assets to personal accounts on other exchanges, where they sold them or opened the margin position on illiquid coins like Dogecoin, which often led to a complete loss of funds.
Much love to margin trading, according to some observers, differed Michael Patrin, who was alleged to have opened a multimillion-dollar deal on BitMEX.
After the bankruptcy of the EY was appointed a Trustee of QuadrigaCX. The company had difficulty restored chain of events, as Cotten led the exchange itself, had not filed tax returns, accepted cash deposits and carried out the insights of customers manually without any system.
In October, Jennifer Robertson agreed to transfer their assets by $9 million EY including real estate, to cover the loss of users. It left itself with a relatively small amount of cash, car and jewelry.
It’s not even close allows you to return the lost funds because, as of April QuadrigaCX had assets of only CAD $29 million
Dead man’s chest
Given the history of Gerald Cotto, there is nothing surprising in the fact that the fact that his death questioned. As there is nothing surprising in the fact that users have lost money by trusting the mediator. Every exit poll Scam and every hacking only confirms that if you keep assets on the stock exchange, the assets of the exchange.
Cotten opened a completely insane position on Dogecoin, because he knew — users do not follow the exchange’s wallets and they don’t care about the accountability of the mediator to the moment when it’s too late.
Regardless of alive or dead Cotten, chaos around QuadrigaCX must once again remind the community about the responsibility for their money. And not only in the context of separate storage of private keys, but in the context of timely preparation of wills, specifying the required data to restore access to bitcoin wallets.
The longer bitcoin exists, the more often pop up «the chests of the dead» without locks and keys. Unfortunately, it is in the «trunk» of Cotto was bitcoins tens of thousands of people.