QuadrigaCX Fiasco

February 11, 2019 4:45 am,

It has become abundantly apparent that the BTC crash induced crypto winter hasn’t managed to seduce the bears. The crash in the broader cryptocurrency market, has sent investors running en-masse has resulted in a number of layoffs at this budding sector. The exchange QuadrigaCX never had $190 million BTC it supposedly lost when its CEO unexpectedly died, new research claims.

The report publish on cryptocurrency portal “Zerononcense Blog”, makes several claims about the true state of the exchange’s BTC holdings, all of which contradict official statements. In January via an affidavit made by Cotton’s wife, it was revealed that the exchange apparently had no access to the wallets, as Cotton had not left any evidence of passwords. 115,000 customers remained without funds, which amounted to around $250 million CAD in cryptocurrency and fiat currency. However, Zerononcense disputes multiple claims in the affidavit, including that the exchange had cold wallets and these contained the $137 million in quarantined cryptocurrency funds. The research findings state the exchange likely only had cryptocurrency reserves of under $100 million. The report also shows evidence showing a party had access to the company’s wallet after Cotton died. Though the exchange has not lost its access to their BTC holdings. The other suspicions center on the exchange using customer deposits to pay customer obligations. The research notes the comparison of exchange withdrawal practices to those of other exchanges like CoinBase, Bittrex, and Binance that show the movement of BTC’s satisfies customers demand as highly unorthodox and extremely inefficient for any legitimate exchange.

The exchange earlier faced legal trouble in November 2018, then a judge ruled in favour of Canadian bank that had frozen around $19. Million in the exchange accounts citing an inability to determine the funds owners.

MyCrypto CEO Taylor discovered that the exchange does not even an ETH cold wallet which stored user funds. He evaluated three main ETH addresses used by exchange and no evidence was found to support that the addresses were used as the cold wallets of the exchange. One wallet containing 500,000 transactions still needs to be analyzed but it is likely not a cold wallet. In addition, a thorough analysis of the exchange main hot wallet cluster address has failed to provide evidence that there has been any movement of BTC to an outside wallet address that contains any significant holding BTC. The exchange’s hot wallets had not made any major transaction to an outside wallet address with a large amount of BTC, suggesting that user funds may have been stored in hot wallets.

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