Canadian Bitcoin investor who ‘died’ left $137 million in customer money in limbo

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A Canadian Bitcoin investor whose sudden death in 2018 left $137 million of his clients’ money in limbo, had spent millions to fund his own lavish lifestyle and had done business with a white-collar criminal.

Gerald Cotten, the 30-year-old founder of the cryptocurrency trading platform Quadriga CX, died during his honeymoon in India in 2018.

The company kept his death a secret for a month before announcing it and later declared bankruptcy after Cotten’s wife, Jennifer Robertson, revealed that her late husband was the only person who had the passwords needed to access investors’ money. . That shady behavior has led to speculation that Cotten faked his demise and is still alive.

At the time of Cotten’s death, Quadriga CX owed its 76,000 investors approximately $137 million ($215 million CAD). The country’s largest securities regulator last year ruled that Quadriga CX’s collapse was due to a Ponzi scheme from Cotten.

Investigations by Canada’s Royal Canadian Mounted Police and the FBI are ongoing after investors raised concerns about the mysterious timing of Cotten’s death.

There has been much speculation among customers that Cotten faked his own death, and they are urging authorities to have his body exhumed in Canada to prove their theory.

Gerald Cotten, the 30-year-old founder of the cryptocurrency trading platform Quadriga CX, died while on a honeymoon in India in 2018. He is pictured with his wife Jennifer Robertson in India.

Gerald Cotten, the 30-year-old founder of the cryptocurrency trading platform Quadriga CX, died while on a honeymoon in India in 2018. He is pictured with his wife Jennifer Robertson in India.

One of those investors, identified only as QCX-INT, spoke at length with CBC for his A Death in Cryptoland.

“He couldn’t control himself, it seems, and just blew an absolutely dazzling amount of money,” QCX-INT told the podcast.

QCX-INT spent months investigating Cotten and Quadriga CX before passing its information on to Canadian and US authorities.

It is not clear how much of QCX-INT’s own research forms the basis of the ongoing investigations.

He – and other investors – have criticized Canadian authorities for what they believe to be a lack of research.

“It’s theft… It’s like a $200 million bank job could happen, and you’ve got a law enforcement agency doing almost nothing to investigate it,” he said.

“Even if hard evidence of fraud was presented to them, you know, they would come back and say to us, ‘We need more evidence, even to investigate,’ he said. “I felt like I should actually hand them a bloodied corpse and a gun with fingerprints to have them examined.”

The Ontario Securities Commission ruled last year that the collapse of Quadriga CX was due to a Ponzi scheme by Cotten.  It found that Cotten had transferred assets for personal use.  The report included this image of wads of cash in his house

The Ontario Securities Commission ruled last year that the collapse of Quadriga CX was due to a Ponzi scheme by Cotten. It found that Cotten had transferred assets for personal use. The report included this image of wads of cash in his house

The Ontario Securities Commission revealed in its June 2020 report that some 76,000 investors collectively lost at least $124.2 million (C$169 million) to the Quadriga collapse in 2019.

The Ontario Securities Commission revealed in its June 2020 report that some 76,000 investors collectively lost at least $124.2 million (C$169 million) to the Quadriga collapse in 2019.

The committee found that Cotten traded on the platform and that clients were not informed when Cotten was the counterparty to their trades

The committee found that Cotten traded on the platform and that clients were not informed when Cotten was the counterparty to their trades

During its investigation, QCX-INT determined that Cotten’s co-founder, Michael Patryn, was a convicted white-collar criminal.

Born Omar Dhanani, Patryn changed his name at least twice over the years.

He was convicted in the US in 2005 for his role in an identity theft gang and was sentenced to 18 months in prison before being deported back to Canada.

Cotten's co-founder, Michael Patryn, was a convicted white-collar criminal who served time in the US for an identity theft gang

Cotten’s co-founder, Michael Patryn, was a convicted white-collar criminal who served time in the US for an identity theft gang

Patryn, who changed his name to Michael Patryn after being released from prison, says he knew nothing about Cotten’s dealings and left Quadriga in 2016.

Cotten’s wife has also said she had no knowledge of her late husband’s dealings.

Cotten died in December 2018 due to complications from Crohn’s disease while on a trip to India.

His death came four days after he drafted a will, which bequeathed all of his assets to his wife, including $9 million worth of real estate, a Lexus, Cessna plane, and yacht.

His death certificate, issued by the Indian authorities, contains the wrong spelling of his name.

After waiting a month to announce his death, the company revealed that Cotten was the only person with access to passwords for the digital wallets at about $135 million.

In the wake of his death, QuadrigaCX was unable to locate or secure a significant amount of cryptocurrency reserves.

Cotten died in December 2018 due to complications from Crohn's disease while on a trip to India

His death came four days after he drafted a will, leaving all his possessions to his wife, including $9 million worth of real estate, a Lexus, Cessna plane, and yacht.

Cotten died in December 2018 due to complications from Crohn’s disease while on a trip to India. His death came four days after he drafted a will, leaving all his possessions to his wife, including $9 million worth of real estate, a Lexus, Cessna plane, and yacht.

The Ontario Securities Commission revealed in its June 2020 report that some 76,000 investors collectively lost at least $124.2 million (C$169 million) to the Quadriga collapse in 2019.

About $115 million of that was due to Cotten’s fraudulent trade, the regulator said.

When Cotten died, the platform owed approximately C$215 million to customers, according to the commission. Cotten also transferred assets for personal use, transferring approximately C$24 million to him and Robertson between May 2016 and January 2018, the report found.

About C$34 million was recovered by the trustee and paid to customers. The trustee also recovered assets from Robertson that were expected to be worth about C$12 million, while Cotten returned about C$10 million to Quadriga in the months before his death.

Speculation is rife among investors that Cotten is still alive and living off the embezzled funds.

Lawyers representing some clients filed a lawsuit in late 2019 asking police to exhume Cotten’s body to make sure it’s him.

In an affidavit, Cotten’s widow said she has been exposed to online threats and “defamatory comments,” including claims that her husband is not dead.

To date, no statement has been made about whether Cotten’s body may be exhumed.

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