Quadriga Ponzi Scheme, asserts Ontario Securities Regulator

QuadrigaCX operations resemble a Ponzi Scheme.

On Thursday, the Ontario Securities Commission (OSC) affirmed the public with this conclusion.

The trusted provincial securities regulator of Canada, OSC, has revealed the real bankruptcy plot of the now-inoperative cryptocurrency exchange. QuadrigaCX, the mentioned crypto trading platform, filed into bankruptcy a few months after the death of its founder and CEO, Gerald Cotten, in India. However, OSC reveals the Quadriga Ponzi Scheme.

OSC made a report on April 2020 and it was only released to the public last Thursday. Reports have shown malicious practices of Cotten. It includes the trading allegations against his clients, setting up fake accounts to trade his customer’s funds, and failing to maintain the records. Furthermore, the aforementioned allegations revealed in the past by the court-appointed auditor, Ernst and Young (EY). The auditors recovered the customer funds after the downfall of QuadrigaCX in February 2019.

Up to this date, the company has retrieved approximately C$46 million.

The curated report revealed that Gerald Cotten was the only person who managed the assets. More so, the report additionally stated:

“The evidence shows that Cotten regularly moved clients’ crypto assets off the Quadriga platform and into accounts he had open on other crypto asset trading platforms. At one point, Cotten told a Quadriga contractor that a certain wallet address was a Quadriga cold storage address. When it was really a deposit address for Cotten’s account at another crypto asset trading platform.”

Speculations arose when approximately $200 million customer funds were missing. They surmised the funds were lost as Cotten was the only person who managed the exchanges of his crypto wallets. OSC revealed that an estimated $169 million was lost due to fraudulent conduct.

Furthermore, the report revealed that an asset shortfall of approximately $115 million arose from the fraudulent trading of Cotten on the Quadriga platform.

Furthermore, the report disclosed a $115 million asset shortfall ensured from the fraudulent trading on the Quadriga platform. Cotten created pseudo-accounts on Quadriga and credited counterfeited currency and crypto-asset balances to himself. Of which, he traded with those innocent consumers on the exchange platform. He kept up with real losses when the crypto-asset prices changed. Thus, it resulted in shortfall assets to satisfy client withdrawals.

OSC tied the conclusion with regard to the Quadriga Ponzi Scheme.

They conducted interviews with former advisers, contractors, clients, co-founder, and widow, Jennifer Robertson. Even though Michael Patryn, the co-founder of QuadrigaCX, departed from the exchange in 2016, he did not give any comments.

Furthermore, Robertson declined to give any statements with regard to the report.

In the conclusion of the report, it clearly states the exchange is an extreme example, but not a representative of the crypto asset platform industry. More so, the Quadriga Ponzi Scheme event highlights the risk for investors in relation to crypto trading platforms.