Altcoin News: Is Crypto Exchange QuadrigaCX an Exit Scam?

February 5th, 2019 by Marko Vidrih on ALTCOIN MAGAZINE

The suspicion is confirmed more and more evidence shows that the Canadian crypto exchange QuadrigaCX might have played us all. Every day, new questions about the Exchange with its bizarre story with the sudden death of Gerald Cotten and the Keys of the Cold Wallets appear. Meanwhile, some claim that this was not a real exchange, but a large-scale pyramid scheme.

QuadrigaCX has no access to its cold wallets

A few days ago, QuadrigaCX announced that the 30-year-old CEO, Gerald Cotten, had recently died in India and was probably the only one in the company who held the key to the Exchange’s Cold Wallets. Thus, no one more has access to the cold wallets and the cryptocurrencies of users remain inaccessible for the time being. It is estimated that the total damage is approximately $145 million. In total, about 115,000 users are said to be affected.

The Directorate of the Exchange has asked for bankruptcy protection because they currently have significant liquidity problems and can not pay their clients. Users of the Exchange have been struggling with Withdrawal for weeks. For today, an official hearing with Ernst & Young (EY) is planned.

But an exit scam from QuadrigaCX?

The official statement of the Canadian Exchange is becoming more questionable. Many well-known figures from the Crypto scene are vocal that QuadrigaCX was a definite scam. The co-founder and CEO of Kraken, Jesse Powell, tweeted that the whole story lags behind and he agrees with Kraken to assist the police in the investigation.

CryptoMedication has announced on Twitter its investigations into the case and summarized the existing ambiguities:

It appears that there are no identifiable cold wallet reserves for QuadrigaCX.
It appears that QuadrigaCX was using deposits from their customers to pay other customers once they requested their withdrawal.
It does not appear that QuadrigaCX has lost access to their Bitcoin holdings.
It appears the number of bitcoins in QuadrigaCX’s possession are substantially less than what was reported in Jennifer Robertson’s (wife of allegedly deceased CEO and Owner Gerry Cotten) affidavit, submitted to the Canadian courts on January 31st, 2019.
At least some of the delays in delivering crypto withdrawals to customers were due to the fact that QuadrigaCX simply did not have the funds on hand at the time. In some cases, QuadrigaCX was forced to wait for enough customer deposits to be made on the exchange before processing crypto withdrawal requests by their customers.
After completing the analysis, it is the author’s opinion that QuadrigaCX has not been truthful with regards to their inability to access the funds needed to honor customer withdrawal requests. In fact, it is almost impossible to believe that this is the case in lieu of the empirical evidence provided by the blockchain.

Bitfinex, CEX.io, and Coinapult also affected?

The CEO of Binance also expressed his condolences over Twitter on the death of Cotten and at the same time criticism of the handling of the Private Keys. He said there are several ways to split access to private keys to multiple parties.

QuadrigaCX belongs to cryptocapital.co, which also includes Bitfinex, CEX.io, and Coinapult. Everyone has had some trouble with withdrawals lately. Many see this as a sign of an upcoming bankruptcy for all related Exchanges. That would, of course, be the absolute super grain.

CryptoMedication has also done research about that and published its findings:

Recently Cryptocurrency educator Boxmining published a QuadrigaCX case Update, but didn’t provide us with a source:

Of course, these are just assumptions and assertions. Nevertheless, the common sense leaves the official statement of the Exchange doubt. QuadrigaCX currently has the whole sensation of the crypto community and part of the mainstream. In the next few days, more insights will come to light and clarify the matter. It remains exciting.

Author: Marko Vidrih


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