[2019-02-06] Locked bitcoins in QuadrigaCX might be another exit scam.
Does everyone remember the story of QuadrigaCX's founder, who was claimed to be the only person in control of the exchange's cold wallet, died in India on December, 2018? There are new stories surfacing that the people left running the exchange are using the founder's death to exit scam.
We might begin witnessing more small exchanges doing exit scams if the bear market extends out longer.
Also, do not trade in small and unknown exchanges.
Quadriga's motto
The Canadian exchange claims it has lost access to $145 million of digital assets due to its founders death, however, it is likely that QuadrigaCX never had this money.
QuadrigaCX, the largest Canadian cryptocurrency exchange in terms of trade volume, has recently grabbed the headlines due to its controversial insolvency. It filed for creditor protection after the sudden death of the companys founder and CEO Gerald Cotten, which had led to the liquidity crisis.
The explanation for this was rather extraordinary. It turned out that Cotten was the only person who controlled all private keys to the cold storage wallets where QuadrigaCX used to hold almost all of its funds. As a result, QuadrigaCX had to confess it failed to locate or access about $145 million in various digital assets.
At first, humanity prevailed. After all, Cotten was only 30 years old, and he went to India with a charitable goal to open an orphanage where he died. Meanwhile, his widow has been reportedly receiving threats from the clients of the exchange, who are furious and learning a tough lesson of the golden cryptocurrency rule, not your keys, not your coins.
Notably, Jesse Powell, the head of the Kraken exchange, which is one of the largest and most influential exchanges, also shares these views. In his latest post on Twitter, he touched on issues of witnesses, identity verification, and credibility of a death certificate. He is ready to share some insider information with Canadian authorities if the need arises.
Besides the above-mentioned $145 million in digital assets, the exchange also owes its users more than $50 million in fiat currency, according to the court filing. The fiat issues started because of a legal dispute between QuadrigaCX and the Canadian Imperial Bank of Commerce (CIBC), which last year froze multi-million accounts linked to Costodian Inc., one of Quadrigas payment processors. There were also problems with Billerfy and WB21, two more payment processors working with Quadriga and are holding part of its funds.
In this regard, Powell claimed the entire case looked very much like an exit scam. He cites the suspicious combination of recent developments, including sudden disappearance of the founder after fiat problems and high withdrawals.
To make things worse, a respected crypto industry researcher, Crypto Medication, published a comprehensive blockchain analysis of Quadrigas addresses and transactions. Based on its findings, the experts concluded that QuadrigaCX did not have as much Bitcoin as it claimed on the affidavit which it submitted to the Canadian court.
Even worse, the researchers revealed that the exchange had no identifiable cold wallet reserves. Instead, it used one clients deposits to fund another clients withdrawals. This explains the occasional delays in withdrawal execution, as sometimes QuadrigaCX did not have enough liquid funds at its disposal.
Read in full https://beincrypto.com/quadrigacx-saga-human-tragedy-or-yet-another-exit-scam/
We might begin witnessing more small exchanges doing exit scams if the bear market extends out longer.
Also, do not trade in small and unknown exchanges.
Quadriga's motto
The Canadian exchange claims it has lost access to $145 million of digital assets due to its founders death, however, it is likely that QuadrigaCX never had this money.
QuadrigaCX, the largest Canadian cryptocurrency exchange in terms of trade volume, has recently grabbed the headlines due to its controversial insolvency. It filed for creditor protection after the sudden death of the companys founder and CEO Gerald Cotten, which had led to the liquidity crisis.
The explanation for this was rather extraordinary. It turned out that Cotten was the only person who controlled all private keys to the cold storage wallets where QuadrigaCX used to hold almost all of its funds. As a result, QuadrigaCX had to confess it failed to locate or access about $145 million in various digital assets.
At first, humanity prevailed. After all, Cotten was only 30 years old, and he went to India with a charitable goal to open an orphanage where he died. Meanwhile, his widow has been reportedly receiving threats from the clients of the exchange, who are furious and learning a tough lesson of the golden cryptocurrency rule, not your keys, not your coins.
Notably, Jesse Powell, the head of the Kraken exchange, which is one of the largest and most influential exchanges, also shares these views. In his latest post on Twitter, he touched on issues of witnesses, identity verification, and credibility of a death certificate. He is ready to share some insider information with Canadian authorities if the need arises.
Besides the above-mentioned $145 million in digital assets, the exchange also owes its users more than $50 million in fiat currency, according to the court filing. The fiat issues started because of a legal dispute between QuadrigaCX and the Canadian Imperial Bank of Commerce (CIBC), which last year froze multi-million accounts linked to Costodian Inc., one of Quadrigas payment processors. There were also problems with Billerfy and WB21, two more payment processors working with Quadriga and are holding part of its funds.
In this regard, Powell claimed the entire case looked very much like an exit scam. He cites the suspicious combination of recent developments, including sudden disappearance of the founder after fiat problems and high withdrawals.
To make things worse, a respected crypto industry researcher, Crypto Medication, published a comprehensive blockchain analysis of Quadrigas addresses and transactions. Based on its findings, the experts concluded that QuadrigaCX did not have as much Bitcoin as it claimed on the affidavit which it submitted to the Canadian court.
Even worse, the researchers revealed that the exchange had no identifiable cold wallet reserves. Instead, it used one clients deposits to fund another clients withdrawals. This explains the occasional delays in withdrawal execution, as sometimes QuadrigaCX did not have enough liquid funds at its disposal.
Read in full https://beincrypto.com/quadrigacx-saga-human-tragedy-or-yet-another-exit-scam/