• The defunct exchange owes creditors $215.7 million
• EY says it has reached a dead end
• Circumstances of the CEO’s death remain mysterious

Three months of investigations on the now-defunct QuadrigaCX cryptocurrency trading platform has turned up only $28 million in cash assets. QuadrigaCX and its related holding companies owe some 76,000 creditors a whopping $215.7 million.

Investigations Hampered

According to local press outlets, Ernst and Young (EY), the firm overseeing bankruptcy proceedings for the defunct cryptocurrency exchange, has given a preliminary report saying it may not be feasible to complete the full review of QuadrigaCX finances because of the company’s poor bookkeeping. The EY report added some exchange’s uncooperative business partners also hampered the investigations beside the sheer volumes of transactions it processed from 2013 when the late Gerald Cotton of Fall River founded it. Commenting, a senior Vice-President of Ernst and Young George Kinsman stated during an interview:      

“These transactions measure in the millions, […] at any given time in a restructuring, you have to do a cost-benefit analysis. If you’re going to have a team of forensic accountants spending a considerable amount of time (working) with no certainty that you’re going to have a recovery, people are going to have to think about whether that makes sense.”

Twists and Turns

The story behind the beleaguered QuadrigaCX, which was once one of the largest in Canada, offered a platform for trading and storing digital assets like Bitcoin, Litecoin and Ethereum, is a long and winding road with many twists and turns.

The case reached a critical stage on April 8, 2019, when the court, recognized that the attempts to restructure the exchange had come to a cropper, appointed business services firm Ernst & Young as the exchange’s Trustee in Bankruptcy to watch over bankruptcy proceedings and assume control of all of QuadrigaCX’s assets.

The only Person Holding the Private Keys

The QuadrigaCX saga is a tale of changing identities, a marriage, a last-minute will and the strange death of a man who was solely responsible for $190 million worth of assets.

Gerald Cotton, the co-founder, and CEO of a leading Canadian crypto exchange died suddenly during a honeymoon in India, according to reports. He was inexplicably the only person holding the private keys to access to customer funds amounting to $190M in crypto and fiat, the majority of which were stored on the exchange.   

The circumstances of his death, in a place where fake death certificates an easily emerge from and from a disease that isn’t typically fatal for a young person helped to fuel suspicion. Also, the happenings leading up to the events of December and January made the whole affair even more questionable.