Crypto Crime News & Updates

The $150 Million QuadrigaCX – PinaColada ?

Brian #Armstrong, the #CEO of Coinbase, one of the world’s largest crypto exchanges, said that the company conducted internal research on the #QuadrigaCX case.

QuadrigaCX has been claiming that# Gerald #Cotten, its CEO, passed away with sole control over its cold wallets containing $150 million in various #cryptocurrencies including #Bitcoin and #Ethereum.

However,# independent researchers claimed that there is not enough #evidence to prove the existence of cold wallets operated by #Cotten. Armstrong also stated that #balances from the QuadrigaCX cold wallets were moved out in early #2018.

In a statement, #Armstrong shared a theory established by the #Coinbase team, emphasizing that it is pure #speculation.#Until the official investigation of the Royal Canadian Mounted #Police is complete, no details in the case can be confirmed.

WHAT’S THE THEORY OF QUADRIGAX’S LOSS OF $150 MILLION?

As Kraken CEO Jesse #Powell said, the story laid out by the #QuadrigaCX team that its CEO passed away with $150 million is highly #suspicious solely because #researchers have been unable to track the #cold #wallets in question.

The# theory of the Coinbase team on the #QuadrigaCX case has the highest chance of being close to the #nature of the real incident, which remains unconfirmed, because it shows the potential #motive of the #exchange to announce the loss of $150 million in #crypto.

In mid-2017, #QuadrigaCX, the largest#cryptocurrency exchange in Canada, suffered a critical smart contract bug. At the time, the #company said that the #bug led to the loss of substantial profits but it #claimed that it will no impact on the core operations of the #exchange.

QuadrigaCX said in June 2017:

While this issue poses a setback to #QuadrigaCX, and has unfortunately #eaten into our profits substantially, it will have no impact on #account funding or #withdrawals and will have no impact on the day to day operation of the #exchange.

The #company may have attempted to salvage the exchange by employing a v#ariety of strategies. But, as the bear #market arrived in early 2018, the #company struggled with #liquidity, which could have led to the inability of the #exchange to process withdrawals.

Software engineer Tong #Zou lost $422,000 in life #savings he obtained working for over 7 years in the U.S. for companies in the likes of #Walmart.

Speaking to #Bloomberg, Zou said that he filed for withdrawal as early as October 2018. The #exchange never got back to the #developer and Zou discovered the QuadrigaCX situation through media #reports.

“I wasn’t using it for #trading — I just wanted to move my money over to my Canadian bank #account. What I didn’t know was that my #withdrawal would be pending or incomplete and it never got deposited in my #bank account. I’ve been waiting four #months so far,” Zou said.

In #consideration of the series of events that occurred prior to the scandal, Coinbase #CEO Brian Armstrong said that the #Coinbase team speculates that the death of Gerald Cotten was used to #salvage the company out of a #devastating situation.

Armstrong explained:

This implies that at least few #people inside Qadriga knew that they were running #fractional. If so, then it’s possible that untimely death of their CEO was used as an outlet to let the #company sink.

IS IT POSSIBLE IT’S JUST AN EXIT SCAM?

The #investigation on QuadrigaCX is still ongoing and the intricacies of the case #remain undisclosed and as such, anything remains a #possibility.

If QuadrigaCX intended to #pull off an exit scam, it could have found a better #timing to do it, ideally in the bull market when digital #assets were valued substantially higher.

While the #possibility that the entire case is merely an exit scam remains a strong #possibility, it is difficult to conclude the #accuracy of any theory until all of the details of the #case are revealed.

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