Saturday , July 24 2021

Crypto chaos: from Vancouver to Halifax, which follows the secrets of the missing millions of Quadriga



Headquarters 700964 NB Inc. is a depleted, vinyl sided trailer in the New Brunswick countryside. Most of the mobile homes in the community in Quispamsis, the suburbs of St. John, which overlooks the top of the Appalachian Mountains, are home-made accommodations with friendly people. A slim young man with a brush on his cheek sits on the porch and pulls out of a cigarette, next to a bowl that is almost overflowing with asses. A protective camera mounted on the wall points at the front door was lit by a red light.

This home is one of the few physical tracks of Quadriga Fintech Solutions Corp., which led a virtual exchange known as QuadrigaCX, which allowed people to buy and sell cryptovarns such as bitcoin. In New Brunswick, February 2018, it is registered 700964 NB is part of a network of entities that helped move millions of dollars, so Quadriga could take deposits for their clients and facilitate withdrawal, sometimes in the form of physical bank bills.

An unusual way of doing business is now painfully exposed to all 115,000 users. The company was secured by the protection of the creditor on Tuesday at the Supreme Court in Nova Scotia after its founder Gerald Cotten died suddenly at the age of 30. Mr Cotten left the company in a mess. Quadriga users, who can not withdraw their assets, owe a total of $ 250 million in total.

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Nobody knows where to find cryptocurrency worth $ 180 million. Only Mr Cotten knew how to access him. The bulk of the rest of the money stuck in uncertainty, either in the form of banknotes that were rejected by financial institutions in cash or owned by numbered companies and payment processors. Ernst & Young Inc., a court-appointed supervisor, will oversee a lengthy process of searching for resources, including millions of missing crypts, and return them to Quadrigin's outraged users. Some owe small sums; others have tens of thousands of exchanges. One account contained $ 70 million.

Head office 700964 NB Inc. is a trailer in Quispamsis, a suburb of Saint John, N.B. This home is one of the few physical traces of Quadriga Fintech Solutions Corp.

Scott Munn / Globe and Mail

Quadriga was not as much a company as an independent show. Mr. Cotten ran the company mostly from his laptop, wherever it happened. In the last months of his life, which was usually the home he shared with his wife, Jennifer Robertson, in New Scotland, according to court documents. Quadriga did not have a physical office, no bank accounts, or even an accounting service. Mr Cotten employed only a small group of performers. Cryptowatch exchanges in Canada are not regulated. Nobody cares about society.

An enormous amount of missing crypts, the sudden nature of death g. Cottna (the company said that he died during a trip to India because of complications from Crohn's disease) and the fact that he signed a testament less than two weeks before his death caused an uproar. speculation that he might not be dead. Mrs Robertson has received threats to her security, just like Quadrigin Operations Director Aaron Matthews, according to her statement.

Mr Matthews is listed as the owner of 700964 NB along with Sarah-Lynn Matthews, according to the company's registration. But in the park for mobile homes, a man on the porch tells the Globe and Mail journalist that no one lives there. He is happy to say his name is Jim. Soon after, she refuses answers to other questions. Visibly shakes, requires a journalist and a photographer to leave the property. A person who knows lease arrangements in the park says that Aaron and Sarah-Lynn Matthews actually rent real estate. The neighbor says that Mrs Matthews lives there and that UPS and Purolator trucks stop occasionally and deliver small packages to their homes.

Later, when the reporter Globe took a photo at home, a woman in the baseball cap filled the front door and screamed grave threats from the porch.

Since the Bre-X Minerals scandal, the notorious publishing house of the nineties, the Canadian business community has seen that after one person's death, the company is so quickly decayed. Perhaps there is a greater mystery about why anyone has trusted Quadrigi.

Mr Cotten and his wife, Jennifer Robertson, lived in Fall River in the N.S., outside Halifax. Their home was on the lawn front "sold" on February 6, 2019.

Darren Calabrese / Globe and Mail

Quadriga was the idea of ​​Gerald Cottne, a male entrepreneur who had a shock of pink hair and a light smile. He grew up in Belleville, Ont., And in 2010 he obtained a Business Administration Degree at the Schulich School of Business at the University of Toronto, York. An enthusiastic actor Immigrants of Catan, playing a strategy game, she met regularly with a group for meetings in a friend's home.

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As a bitcoin gaining visibility in years after graduation, he became a constant in the growing crypto-scenario scenario in Toronto. In 2013, the devotees met in a small bar in the heart of the city, called the Charlotte Room, before the event moved to a decentralized office next year. The people who encountered him described him as friendly and charismatic, quick to give some loans to friends in need.

He also spent some time in Vancouver and became director of Bitcoin Co-Op, an organization that promoted the use of cryptography. Michael Yeung, another director, recalled that Mr. Cotten is not even a naive idealist about bitcoins for someone who would quickly make money. "My feeling is that he was a bit both – and he was in it in the long run," Mr Yeung said. Andrew Wagner, who is also a co-op director, described him as "very kind, very funny". However, he was a private man who kept his circle of friends small.

He had an adventure line – Mr Cotten obtained a license for a pilot and an airplane, and sought to obtain a helicopter license at one point – but he balanced it with reasonableness. Michael Perklin, a friend of the crypto-industry industry, said that Mr. Cotten carefully avoided gluten when they went to lunch and made sure that instead of beer, they brought cider to the night of social games because of digestive problems. Then, Mr. Cotten told his friends he had a celiac.

Quadriga was the idea of ​​Gerald Cottne, who grew up in Belleville, Ont., And in 2010 obtained a Business Administration Diploma at the Schulich School of Business at the University of Toronto.

Mr. Cotten founded Quadriga in 2013, making him one of the first Canadian exchanges of crypts. He joined another regular in the bitcoin scene, Michael Patryne, and registered a company in British Columbia. While Quadriga had offices in Vancouver and Toronto and four employees by 2015, profitability was unavailable. According to a prospectus that was made that year in an erroneous attempt to publicize it, the trading platform in the three-month period ended on January 31, 2015, received a modest $ 22,168 of revenue.

But the company saw that it was sending money to the Canadian Stock Exchange (CSE) to help it grow. Mr. Patryn came in there. In addition to being a co-founder and shareholder, he had a contract with Quadrige consultant and advised the company to pursue the list. As a word spread the initiative, he turned to Vancouver businessman, called Robert Lawrence, who offered to help with the recruitment of investors and take public the public, in accordance with Mr. Patryn was later filed against Mr. Lawrence.

Mr. Patryn said Mr Lawrence did not perform his duties properly and that the company never managed to enumerate. Mr Lawrence raised $ 850,000, of which $ 150,000 from Mr. Patryn. But by June 2015, the company ran out of money and lost 45% of its market share, according to Mr. Patryna. Mr Patryn said that a lot of money needs to be spent to repair the "poor quality" of Mr Lawrence's work. Investors have invested another $ 600,000, including $ 200,000 from Mr. Patryn to prevent the company from collapsing.

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By February 2016, Quadriga abandoned her plans to find and interrupt her relations with Mr Patryn, he said in court documents, as he found out that he was associated with Mr Lawrence. "The news of its cessation from QCX has materially and negatively affected its ability to provide similar work in the financial technologies industry," explained Patryn.

Mr. Cotten at the Bitcoin House in Paris in 2014.

Facebook / Quadriga CX

In response, Mr Lawrence denied the accusations and said Mr Patryn had approached him, not the other way around. In addition, Quadriga's failure was his own fault – and Mr Patryn was the "supervisory mind of the company", he argued. (Mr Cotten is barely mentioned in the application.) Mr Lawrence wanted to refuse him. No applications have been filed in the case since 2016. Mr. Lawrence could not get comments.

This week, Mr. Patryn defended his time in Quadriga.

"At that time, we were leaders in several ways and we worked responsibly and with a degree of transparency that is not possible today. … More than three years ago, I left the company for a fundamental disagreement with Gerry about his decision to stop the classification process. "The relationship was tense, but they remained friends, he said. Mr. Patryn added that since then he has not been involved in the management or operations of Quadrige.

In October, The Globe received an e-mail from the Executive Concierge, called Windsor Group, which was offered by Mr. Patryne interviews to discuss virtual currencies and describe him as Quadriga's director. Mr Patryn said he did not know what the Windsor Group was, nor did he allow anyone to put him in for the Quadriga director since he was never a member of the board.

Shortly after Quadriga pulled a socket on the list at the beginning of 2016, her chief financial officer resigned along with two board members, leaving Mr Cottn alone to lead the company. (British Columbia Securities Commission issued a decision to discontinue trading with a private company.) Patryn remains a shareholder with a 17.4% share through Crypto Consulting Group registered in Hong Kong. His partner Lovie Horner owns another 10.3 percent. Horner works as a designer for a clothing company for dogs, according to his LinkedIn profile, which is no longer online. Mr Cotten had 41.2 percent of the largest share.

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Mr. Patryn is now running a company called the Fintech Ventures Group, the first Canadian incubator for startup companies. Finding a name for Michael Patryn shows some articles that talk about his business knowledge and physical strength. An article on the website called Young Upstarts is called "a representative on fintech" and says that he worked as a MMA fighter. His own website says he is also a personal trainer who teaches Thai kickboxing and fighting mud. His website also says he graduated from social psychology at the University of California, Santa Barbara. (A spokesman for the school says that the registration office does not have any record of a student with that name, "nor was there such a program.")

Last year, Mr. Patryn hired a Toronto-based company named Reputation.ca Ltd. to "remove the negative content that referred to a particular site" in accordance with an action brought against Toronto. Reputation.ca offers services to bury awkward search results while creating and promoting positive materials. Mr Patryn agreed to pay $ 3,500 a month in July 2018 for the personal repression of the company, ensuring the removal and maintenance of reputation through judicial documents. He told Reputation.ca that his problem is post on a website called the Board of Appeal that is no longer online.

Reputation.ca is also Mr. Patryne on Reddit warned that the user who claims to be Mr. Patryn, co-founder of Quadrige, a "crook" named Omar Dhanani.

Both sides were struggling with costs and Mr Patryn sued, claiming that Reputation.ca did not remove content within the promised timeframe. He is seeking a return of $ 10,500 and said he was "suffering a permanent reputation."

The company acknowledged that it provides services. "Mr Patryn turned to Reputation.ca to help with the removal of online records relating to criminal charges and convictions against him, including money laundering and theft," according to the court's submission. "More specifically, a number of complaints were filed against Mr Patryn and his nicknames "Omar Dhanani" and "Omar Patryn", "says the application, which refers to posts on the Board of Appeal's website.

Yacht owned by Mr. Cottn.

Reputation.ca claimed that he never provided a timeline and said he had created 10 separate websites, articles or profiles with positive material about Mr Patryne. Reputation.ca claimed that the Reddit article had been removed from the first page of Google's search results, thanks to four separate websites that it created. Mr Patryn has stopped paying three months within a five-month deadline, the company claimed, and seeks a balance of $ 7,000.

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Mr Patryn contested the allegations in the December court's role and denied "any claim" from Reputation.ca.

The e-mail The Globe this week is Mr. Patryn said he was not Mr. Dhanani.

The case file contains the letter of 25 January, lawyer Mr. Patryna, Samuel Osei, who demands that the names of Omar Patryn and Omar Dhanani be removed from the trial file. "Your unnecessary inclusion of these names in applications as aliases is not only wrong, but also inflammatory for our client," writes Osei.

In fact, Omar Dhanani, who spent 18 months in federal prison in the United States. In 2004, the prosecutors from the US State Prosecutor's Office for New Jersey County were charged. Dhananiya then lived in California for his role as a Web site of identity known as Shadowcrew. Mr Dhanani, who also used the name Omar Patryn, made an agreement and in 2005 pleaded guilty to one conspiracy point for the transfer of identity documents. Mr Dhanani, who was born in 1983, was released in 2007. By 2009, he was deported to Canada under the court record.

Bitcoin was always volatile, but at the beginning of 2017, when Mr. Cotten led Quadrigo to a great extent alone, the price of bitcoin exploded. From January to December, the price rose by almost 3,000 percent to $ 18,674, as the crypts became the latest speculative frenzy.

That was good news for Quadrigo. In the early days, Quadriga was small – an analysis of the data stored by CBIX, a Canadian Bitcoin index, owned by the Stock Exchange crypto currency Bitbuy.ca, shows that a bitcoin of $ 7.4 million traded hand on the Platform of the Year 2014.

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According to the data analysis carried out by The Globe, in 2017, Quadrigo traded with an incredible $ 1.2 billion of bitcoins. Quadriga has taken over a commission for every store.

But bitcoin has created new problems for Mr. Cottna. Quadriga did not have any bank accounts for dealing with customers. (The main financial industry has been cautious in providing crypto-services, partly because of money laundering concerns.) Instead, it has set up a network of third-party payment processors to open accounts with banks in order to facilitate transactions. Mr Cotten's friend Mr. Perklin said that his father, Quadrige user, told the bank last week that he had to pay $ 10,000 to the bank in Poland. Mr Perklin fired an email to Mr Cotten to check that the instructions are correct. Mr Cotten assured him that they were. However, the deposit was not properly credited to the account, but Perklin's father was still trying to resolve the matter when Quadriga quit the business last month.

Payment system g. Cottna encountered a serious problem with the Canadian Commercial Bank, as the price of bitcoin reached its peak. In December 2017, millions of dollars began to be recharged to the CIBC bank accounts belonging to Quadriga payment processors. In less than three months, hundreds of Quadriga users have invested $ 67.1 million when they decided to cash for bitcoin.

The bank spotted a sudden inflow of money, and in January 2018 froze more than $ 25 million in accounts belonging to Costodian Inc., one of Quadriga payment processors, and its owner, Jose Reyes. In court records in Ontario, the CIBC said it had frozen bills because it could not figure out who owns the assets – Quadriga, Costodian, or 388 people who deposited money on bills to buy crypts. The Bank also received recalls from several investors. Quadriga fired that most of the money belonged to the company – and that the CIBC was frozen incorrectly.

Court documents illuminated Quadriga's internal operation. Users first sent money to Costodian's accounts. In return, their accounts were attributed to QuadrigaCX Bucks, which could only be used to buy crypts on the platform. The CIBC attempted to verify that all Quadriga user accounts were correctly credited to the QuadrigaCX Bucks account, but the exchange refused to cooperate with court documents.

In the meantime, buyers began to face major delays in attempts to raise funds. In the e-mail sent by The Globe last autumn, Cotten blamed the legal battle for a longer withdrawal time, as some users reported waiting for payouts for months. He was loud about banking issues in the company – disappointed by the unwillingness of large companies to deal with crypts. Some of his personal accounts as well as those of his family members were imprisoned by large banks for his association with crypts, he told The Globe.

Mohamed Lamine Chabane, Quadriga Investor, in Montreal on February 8, 2019.

Francois Ollivier / Globe and Mail

"The number of individuals in the Bitcoin community who were excluded from the banking system is astounding," he wrote.

Quadriga's site at Reddit, meanwhile, was overwhelmed by the discontent caused by angry customers, but people still used the platform, as Quadriga offered the cheapest bitcoin price. Sellers who want to liquidate their bitcoins would get more Canadian dollars in return if they used Quadrigo to sell in the sale, while customers could cut the crypt at lower prices. This has created a significant arbitrage opportunity for smart traders.

In the end, the court took over the assets and left them to Costodian through bank drafts, but neither company nor Quadriga could find a bank to process them.

During the riot, Mr. Cotten settled into a seemingly peaceful life in Fall River, N. S., in communities in the bedroom just before Halifax. Under the marriage law, on June 8, he is married legally. They shared a modest two-story house. dressed in a sidewalk with cherries, in a relatively new development that offers a lot of privacy and space for the inhabitants. The house had a "Sold" sign this week.

Mr Cotten also had an airplane and a 51-meter sailboat, equipped with three cabins called The Gulliver. (The ship was sold last week at a site operated by Sunnybrook Yachts for $ 459,000, but the referral has since been removed.) His wife was managing a real estate management company that gathered about a dozen people between November and around Halifax property of 2017 and April 2018. The portfolio, mostly consisting of residential houses, is worth about $ 6 million.

It seems Mr. Cotten missed contact with Cryptowatch friends in Toronto and Vancouver. Many were surprised when they heard that he had married and even less lived in the Fall River. Mr Perklin said that he never heard Mr. He did not even appear in the Halifax bitcoin scene. Billy Garrison, an enthusiastic group from the Halifax group that leads the local group, said he never crossed the path with Mr. "I was quite surprised when I realized that they were originally from New Scotland," he told Quadrigo.

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Meanwhile, the price of bitcoin reached the peak in mid-December 2017 and fell sharply in 2018, taking other cryptocourants with it. (Bitcoin dropped by 82% from the high.) Crash prices caused panic, especially among small investors who were trying to get their money. However, Quadriga was still unable to facilitate withdrawals accordingly. One user named Yi Sun sued a company in B.C. October 2018. He claimed that Quadriga paid $ 137,379.40 when he tried to pay the money. Quadriga never submitted an answer and, although the court ordered the company to pay, it has not yet done so in court.

Maurice Chiasson, attorney at Stewart McKelvey, represented Quadrigo at the Supreme Court of Nova Scotia in Halifax on 5 February 2019.

Andrew Vaughan / Canadian Press

During the riot, Mr. At the end of last year, Cotten traveled to India to open an orphanage, according to Quadrige. The photo has since circulated via the website of the building with the inscription "Jennifer Robertson & Gerald Cotten Home" along with the date of December 2018. The building is in Venkatapuram, according to the sign, and carries the logo of the American ne. The non-profit organization did not respond to several e-mails messages and phone calls about the photo.

On 14 January, Quadriga made a statement on her website stating that Mr Cotten died on December 9th. "Gerry was deeply concerned about fairness and transparency – the values ​​he lived in his professional and personal lives," the statement said. "He was busy and passionate, with an unwavering commitment to his clients, employees and family."

The news has sparked speculation on the Internet about his death, especially since Quadrige customers have still faced delays in obtaining payments. There is a death certificate for Mr. Cottna in a database maintained by the Rajasthan government, where his death on December 9 was recorded as the Fortis Escorts Hospital in Jaipur.

On a question about Mr Cotten, a spokesman for the hospital said this week that the patient had been taken to a hospital in a critical condition on December 8th. He had septic shock, perforation peritonitis and bowel obstruction. The next day, a heart failure stopped, but it was revived. His condition worsened and the next day he went into a heart failure. At 7:26 pm, he was declared dead.

After the death of Mr Cotten, the quandering quadrige was quenched to Mrs Robertson, who was the only beneficiary and executor of his property. In January, the meeting of shareholders – Mr Patryne and Mrs Horner – called for the appointment of new members of the board of directors, since in fact there was no longer a committee. Mr Robertson's father, Thomas Beazley, and a man named Jack Martel were appointed, and the committee decided to abandon Quadrige. On 31 January, the company filed a claim to protect creditors in Nova Scotia.

Mrs Robertson, together with Mr Matthews, has launched a comprehensive search for Quadriga's key information on court documents. Like most stock exchanges, Quadriga has also retained the cryptaloute resources in "cold wallets", a way of offline storage that is designed to protect against hackers. To access the cold wallet you need a password (sometimes more than one) and nobody knew where Mr. Cotten saved information. Mrs. Robertson was browsing their home in Fall River, along with other properties, but she came empty. She even retained a retired RCMP's expert to break into Cotten's encrypted laptop but failed. Ernst & Young, Quadriga Monitor, estimates that at least $ 180 million in the crypt currency is locked somewhere. "Quadriga could not access the cold leaf and / or find that cold sheets contained minimal units of crypt," said Ernst & Young in a report submitted to the court.

The people who knew Mr Cotten were shocked that he did not get ready for something like that. "It's not in line with Gerry's personality," said his friend, Mr. Perklin. "He was a very good designer." Mr Cotten prepared a will and signed it 12 days before his death. While she named Mrs Robertson as her sole beneficiary, she went a step further to describe the distribution of her assets if she did not survive. He identified his pet, Nitro and Gully, or any successor who should go to his father-in-law, along with $ 100,000 for their care.

Mr Perklin recommended Quadrigi's father, brother and his sister. "I knew the president of the board and knew that when I was wrong, at least I had someone I could call," he said. The whole family is now among Quadrig creditors.

If there is hope for the recovery of funds, it will come to court. The judge approved the encrypted Ernst & Young Cotten notebook and USB key. At the Quadriga Quarantine Quarantine hearing on February 5, lawyers representing the company discussed whether a portable notebook should be safely transported between Toronto and Halifax. After all, I could have some advice on where the huge sum of money belonging to thousands of users is located.

The trademark is visible on an underdeveloped plot owned by Gerald Cotten and his widow Jennifer Robertson in Fall River, N.S. 6 February 2019.

Darren Calabrese / Globe and Mail

Some details in the court records indicate that the funds have been recovered and that they are returned to the users by a long, difficult process. The court documents say that the "organization", designated as WB21, which acted as a payment processor, holds millions of dollars belonging to Quadriga and has refused to release funds or even respond to company messages. There is also a photograph in the court, which states that the number of bankers' unauthorized bills held by Mr. Matthews in his role as owner 700964. Warning Five bundles of drafts are loaded onto a candle lit by a candle. Lawyer Quadrige told the court that the bankrupt banks are no longer on the stove.

He is little known about Mr Matthews, who recommended him as the temporary executive director. Mrs Robertson did not react this week for an interview.

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Mohamed Lamine Chabane opened the Quadriga bill in 2017 at the time of the bitcoin blaze. Mr Chabane, who lives in Montreal, chose him because he served the Canadians. (Great American exchanges do not allow residents of Canada to withdraw funds.) The user experience was simple and heard a lot of people who talked online about Quadriga. Last year, he made three withdrawals, and although the process was slow, he eventually got money.

In December, when web users became even more troubled by delays, he tried to raise $ 7,000 from his account, and in January, $ 12,000. She never reached the means. "I have to be strong for my family," said the father of four children who intended to use money as part of their retirement. He's still confused about Quadrige's expulsion. He followed the court proceedings and thinks he is unlikely to be able to repay more than 10 percent of his debt.

"I do not know how the biggest stock market in Canada did not have a structure."


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