When reports emerged in early February that cryptocurrency exchange QuadrigaCX's CEO Gerald Cotten had died, the rumor mill immediately started spinning. Did Cotten fake his own death to run away with some $190 million?
While his death was later confirmed and the exchange filed for bankruptcy in January, there's some truth to the wild speculation that followed Cotten's death: he took the money after all.
A jaw-dropping 70-page report by Canadian bankruptcy monitor Ernst & Young reveals that Cotten got away with some $200 million worth of crypto from QuadrigaCX's clients. He appeared to have siphoned the money into fraudulent accounts for his and his wife's personal use, as The Wall Street Journal points out.
And they took advantage of their newfound riches.
According to the report, the Cottens "acquired significant assets including real and personal property" in the last few years, "either personally or through corporations controlled by them." Cotten and his wife even "frequently traveled to multiple vacation destinations often making use of private jet services."
The report's executive summary notes that "significant volumes of Cryptocurrency were transferred off Platform outside Quadriga to competitor exchanges into personal accounts controlled by Mr. Cotten."
"Substantial amounts of Cryptocurrency" ended up in mysterious accounts, as well as the personal accounts of Cotten "and other related parties."
To make matters worse, the monitor did not find any of QuadrigaCX's financial records for the past several years, writing that "Quadriga appears not to have maintained a general ledger or traditional accounting records since at least 2016." Cotten also did not record any company income on his tax returns, according to the report.
Fraud and Betrayal
It's a damning report, to say the least. Evan Thomas, Canadian litigator, told CoinDesk that “based on the report, what [Cotten] did was clearly fraudulent and betrayed the trust of Quadriga users."
And this mysterious situation is far from solved — so far, only $21.2 million in assets have shown up out of the $190 million that disappeared.
READ MORE: Quadriga Founder Spent Client Money, Bankruptcy Monitor Says [The Wall Street Journal]
More on QuadrigaCX: Did a Crypto CEO Fake His Own Death to Abscond With $190 Million?