From Canada's CBC:
When reports emerged in 2019 that the CEO of Canada’s largest cryptocurrency exchange had died, it left over a quarter of a billion dollars of customers' funds in limbo. While authorities investigated, one online sleuth decided to dig deeper to find the money.
"Dread that fills you with horror." That's how a customer named QCX-INT described his reaction to the collapse two years ago of QuadrigaCX, Canada's largest cryptocurrency exchange, where he had upwards of six figures in cash tied up.
It was the end of January 2019, and QuadrigaCX had just filed for creditor protection in the Supreme Court of Nova Scotia. The announcement followed news that Gerald Cotten, the company's 30-year-old CEO, had reportedly died under peculiar circumstances the month before, while on his honeymoon in India.
On the morning of Dec. 8, Cotten complained of a stomach ache. That day he and his wife, Jennifer Robertson, checked into the luxury resort Oberoi Rajvilas in Jaipur and told staff he wasn't well. The hotel's general manager drove them to a nearby hospital and within 24 hours, Cotten was declared dead.
That's when things took a bizarre turn. According to reports, a doctor was asked to embalm the body, but refused because the request had come from a hotel employee, not the hospital. Cotten's body was then transported — although it is unclear how — to another facility that accepted the corpse for embalming.
In the weeks following Cotten's trip to India, the company kept the death a secret. It was business as usual, with the exchange continuing to accept customer funds. It took more than a month for QuadrigaCX to publicly announce Cotten's death — and then another two weeks for Jennifer Robertson to admit the customer funds were inaccessible.
"I smelled a rat," he said. "Many people did."
She said her husband was the only person who had the passcodes — that is, access to more than a quarter of a billion dollars of his customers' money. She made this startling admission in an affidavit filed in court, and it led to chaos and confusion online. Creditors were in a panic.
"A collective gasp is a good description," said Alex Salkeld, a bitcoin enthusiast from Vancouver. He couldn't believe what he was hearing. "It was definitely a case of, 'Really? Are you sure, guys?'"
Salkeld knew both Cotten and his business partner, Michael Patryn, personally, and watched the drama unfold on social media and in news reports. Internet sleuths scoured the blockchain — the public ledger that tracks cryptocurrency transactions — looking for patterns that would lead them to their funds. Among them was QCX-INT.
"For someone [Cotten's] age, a relatively young guy, to suddenly drop dead, you know, holding the keys to tens of millions of dollars, I think is a shock to most people," said QCX-INT.
“I smelled a rat. Many people did.”
CBC has agreed not to identify QCX-INT, because he fears for his family's safety. A software developer by day, he traded big on bitcoin using a practice called arbitrage. That meant tracking the volatile prices of the digital currency on exchanges around the world in order to buy low, sell high and turn a profit.
In the days after Cotten's death was announced, QCX-INT noticed inconsistencies between what Quadriga was saying about losing the passcodes to the cold wallet reserves — where the bulk of the crypto assets are stored offline for security reasons — and what he and other traders actually saw on the blockchain.
"You would normally be able to see a pattern of deposits being swept to hot wallets [online], then hot wallets to cold wallets," he said. "The difference [with] Quadriga was you couldn't really find any cold wallets. There was just a series of hot wallets, and in turn those hot wallets seemed to be replenished with funds from other exchanges, which again is weird," he said. "Just some very, very shady, strange activity."
When QCX-INT couldn't locate the cold wallets, it dawned on him that the money was gone. In that moment, he had to lie down on the floor. He looked up at the ceiling for a long time as the weight of his loss began to sink in.
"It was the first kick in the guts of many, shall we say."....
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