Lost 100 BTC from scam exchange QuadrigaCX suddenly move

Key points

• QuadrigaCX filed for bankruptcy in 2019 after its CEO Gerald Cotten died under mysterious and sudden circumstances
• Cotten is said to have been the only one who had access to cold wallets containing funds
• It was later revealed that Cotten had defrauded customers, with QuadrigaCX being a Ponzi scheme
• Over 100 BTC were mistakenly transferred to a wallet in 2019 after the bankruptcy filing, with the insolvency administrator EY stating that the funds were now lost because no one had access
• This weekend, the wallets woke up again and the funds were transferred to a crypto mixing service

Sleeping Bitcoin-Wallets of the controversial exchange (no, not that one) QuadrigaCX woke up this weekend. Over 100 Bitcoins tied to the defunct exchange were recovered from Cold Wallets which were previously considered wallets that no one could access.

QuadrigaCX, for those unfamiliar, is the exchange founded by Gerald Cotten and the subject of the gripping Netflix drama Trust No One: The Hunt for the Crypto King. It was one of the early mainstream exchanges, handling over 80% of Canada’s Bitcoin volume at one point. Except it was all a scam.

What happened to QuadrigaCX?

The company filed for bankruptcy in 2019, owing customers nearly $200 million. It was later revealed to be a Ponzi scheme in which Cotten opened accounts under aliases and credited himself with fictitious funds, which he then traded to unsuspecting customers. He was living a double life the entire time, and the exchange was nothing but a front for an old-fashioned Ponzi scheme.

Big Four firm Ernest and Young (EY) is the receiver and caused additional intrigue when it reported that the company had mistakenly sent 100 bitcoins to a wallet it did not have access to.

“On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins … to Quadriga cold wallets that the company currently does not have access to. The Monitor is working with management to retrieve this cryptocurrency from the various cold wallets, if possible.”

CEO dies under mysterious circumstances

The reason this wallet was inaccessible, of course, is because CEO Cotten died under mysterious circumstances while traveling, spawning a million conspiracy theories. He was apparently the only one who had the keys to the offline wallets containing the crypto, which is why so many accused him of faking his own death.

This weekend, the cold wallet that received these 100 BTC in 2019 suddenly became active again. 36 BTC were transferred from this wallet and 33 BTC from this wallet which were two of the largest transactions. But more than the amount, the destination is interesting – the coins were sent to the Wasabi mixing service, a crypto mixing service that obscures the source and destination of crypto funds.

What does this mean?

So is Gerald Cotten alive and well and digging into his Bitcoin savings?

Magdalena Gronowska, insolvency auditor and member of Quadriga’s creditors’ committee, said the funds had not been moved by EY. And previous reports from EY said Cotten was the only one with access to the wallets.

Honestly, nobody knows. This is just another layer of mystery in a story that was already as bizarre, confusing and shady as it could be. The only thing we know for sure is that Gerald Cotten was a fraud and QuadrigaCX was a scam, and now the coins that were supposedly only his to have control over – which were therefore considered lost since he passed away – are moving again.

Either Cotten is alive or someone else has access to these wallets. But if the actor was legitimate, then I ask: why are they sending the money to a mixing service?