The Death of Gerald Cotten
Quadriga CX was a Canadian cryptocurrency exchange that gained significant attention in early 2019 due to the sudden death of its founder and CEO, Gerald Cotten. The circumstances surrounding Quadriga CX's demise were shrouded in controversy and legal complications.
Gerald Cotten passed away in December 2018, reportedly due to complications from Crohn's disease while traveling in India. Unfortunately, his death resulted in a major setback for Quadriga CX, as he was the sole person who had access to the exchange's cold wallets, which held the majority of customers' funds.
As a result, Quadriga CX found itself unable to access and recover approximately CAD 190 million in cryptocurrency belonging to its customers. This created significant turmoil and led to suspicions about the exchange's operations and the integrity of its management.
In subsequent investigations and court proceedings, it was revealed that Quadriga CX had serious financial and operational irregularities. The exchange was reportedly operating as a Ponzi scheme, using new deposits to cover withdrawals and losses. Additionally, there were indications of mismanagement and embezzlement of customer funds.
In February 2019, Quadriga CX filed for creditor protection under the Companies' Creditors Arrangement Act (CCAA) in Canada. Ernst & Young (EY) was appointed as the court monitor to oversee the process. EY's investigations further revealed the exchange's financial mismanagement and lack of proper accounting practices.
The legal proceedings and investigations continued for several months, involving multiple parties, including affected customers, law enforcement agencies, and regulatory authorities. In the end, it was determined that Quadriga CX was insolvent and unable to fulfill its financial obligations to its customers.
The unfortunate outcome of the Quadriga CX saga was that customers were left with significant losses, and the prospects of recovering their funds appeared grim. The case highlighted the need for stronger regulations and oversight within the cryptocurrency industry to protect investors and prevent such incidents in the future.