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According to the excellent podcast series on the story, “Exit Scam,” many people, including his widow, expected a “Dead Man’s Switch” to come after Cotten’s death. The switch is basically an email or other message, triggered in the event of unexpected death, revealing the private keys or where the private keys could be found. The lack of a plan for access to QuadrigaCX’s cold storage wallets seemed especially strange because it came to light that Cotten had changed his will in the month before he went to India. Our story begins in December 2018 with Gerald Cotten, the founder of Canada’s largest crypto exchange at the time, QuadrigaCX. He and his new bride, Jennifer Robertson, go on a trip to India where Cotten, who suffered from Crohn’s disease, fell ill.
It detailed C$12 million in real estate holdings, the Lexus, the Cessna, and the Gulliver; it left C$100,000 for the care of their Chihuahuas. The will made no mention of the external hard drives, called cold wallets, in which Cotten had stored most of Quadriga’s funds. After the revelation the cold storage wallets that were supposed to contain QuadrigaCX’s reserves contained a small fraction of the missing $190 million, accounting firm Ernst & Young followed with another bombshell report in June 2019. It detailed how Cotten transferred millions of dollars in crypto out of customer accounts and into other exchanges, which he then used to fund his lavish lifestyle and personal trading activities. On 14 January 2019, Quadriga announced that their CEO, Gerald Cotten, had died the month prior from Crohn’s disease while doing volunteer work at an orphanage in India.
When S&S suspended operations three months later, taking most of its clients’ funds with it, Patryn took to TalkGold to defend Cotten’s integrity. Both would become regulars on the message boards (“board whores”) and seek each other out on similar HYIP sites; Cotten averaged four posts a day on TalkGold alone. Patryn would tell friends that they’d first met in a con artist meet-cute, like the thieves in an Ernst Lubitsch film who fall in love while picking each other’s pockets. Cotten tried to scam Patryn; Patryn tried to counter-scam Cotten. Soon they were responding to each other’s public posts with inside jokes.
Over several dozen hours of sailing lessons, the yacht dealer learned a few things about his customer. One of those bay islands—four acres of pine encircled by black sand—Cotten purchased that summer. He cleared trees and built a house, though he had no apparent plans to move in. There were also the Lexus and the zippy single-engine airplane, a Cessna 400, which he’d never tried to fly. The couple traveled abroad constantly, and they planned to sponsor a home for 12 children at an orphanage in India. In India, Cotten remarked, the Canadian dollar went a long way.
Others accused his wife, Robertson of involvement in his death and/or disappearance, an accusation which pushed her to attempt to take her own life, she shared with The Globe and Mail. At one point, there were calls for Cotten’s grave to be exhumed for an autopsy to be performed on the body “to confirm both its identity and the cause of death”. Some thought he was moving around, using different names whilst others suspected that if he was dead, he was either murdered or had taken his own life. Suspicions were fuelled when his name was misspelled on his death certificate and by the fact that he had prepared his will just days before his honeymoon. His widow has stated she had no idea he was running a scam.
In January 2014 Salkeld posted a video on YouTube in which Cotten gently teaches his young daughters how to operate the Bitcoin ATM; Salkeld is certain that his two-year-old is the youngest person ever to have purchased Bitcoin. Cotten said he had a helicopter license and offered to take Salkeld on a ride. The yacht salesman had questions, though it was not his job to ask questions. More than 75,000 Quadriga account holders also had questions.
Cotten had allegedly told his wife he would create a mechanism that would allow her to access all of his crypto-related passwords, but he never did. According to an investigation by Canada’s Globe and Mail, Cotten died from complications related to Crohn’s Disease and Robertson returned to Canada with his body. When Bitcoin started crashing, and people were trying to withdraw their money all at once, Quadriga lost a lot of money . Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now. Former QuadrigaCX investors have called for the authorities to exhume Cotten’s body and conduct an autopsy to settle the question in the most final way possible.
The CBC released a 6-episode podcast about Quadriga and the death of its founder called A Death in Cryptoland. Ernst & Young reported on 6 February 2019 that C$468,675 (US$354,300) of bitcoin were “inadvertently” sent to an inaccessible cold wallet. Gerald Cotten’s widow has maintained that she knew nothing about her husband’s activities and agreed to forfeit $12 million in assets. In 2016, Cotten became the sole director of Quadriga when all the other directors resigned. Other than a few contractors, it had no employees, offices or bank accounts thereafter. The company tried to raise money and list on the Canadian Securities Exchange working with Patryn.
Couldn’t get into Cotten’s laptops, and found an affidavit from Robertson saying that she didn’t understand how QuadrigaCX operated—even though one of Robertson’s companies later wired cash to some of Quadriga’s customers. Still, all this evidence was circumstantial—investors hadn’t yet found a smoking gun. According to the documentary, that’s around the time that Cotten started to invest his money in islands, cars and property, traveling the world while running his exchange. In 2014 Cotten spoke publicly of moving currencies between exchanges to take advantage of arbitrage opportunities. It may be that he traded Quadriga’s funds in a frantic effort to recoup the losses he had sustained. It was the behavior of a doomed gambler employing the martingale strategy, successively doubling down in a desperate effort to get back to zero, until he had dug a hole so deep that he could only be buried inside it.
An exchange shouldn’t be shut down because an executive disappears; that’s against the spirit of decentralization. It seems possible and even likely that Cotten alone was responsible for the exchange’s state at the time of his death. Most intriguingly, creditors and journalists, are investigating whether Cotten really died at all, or whether he made off with a fortune and is now living in exile. Just last week, in mid-December, creditors asked police to exhume Cotten’s body and perform an autopsy. “His death has been kept a secret because there are no funds and the whole company will collapse if a sell off occurs,” said the sender, who claimed to have attended Cotten’s funeral service but did not identify himself.
They surfed his social media accounts at first, then traced Cotten’s digital footprints even more closely for clues. Now attorneys for QuadrigaCX’s investors are asking that Cotten’s body be exhumed, so that they can settle the question of whether he is really dead. Eric Schletz, the pilot who brokered Cotten’s purchase of the Cessna 400, has described having seen Cotten walking through an airport with $50,000 in cash. There were rumors of other employees taking similar trips.
Which meant that Cotten was not really who he said he was either. At the time of his passing, he had over CA$250 million [$200 million] and the passwords to Quadriga’s accounts. According to the Netflix documentary, at least 110,000 customers were affected. When Bitcoin started crashing before Cotten’s death and people tried to withdraw their money all at once, Cotten’s company was on track to lose millions of dollars.
Because Canadian banks refused to accept cryptocurrency businesses as clients, Quadriga had to rely on third-party processors, which levied outrageous fees and in some cases stole funds outright. One Quadriga contractor claims today that the payment processor WB21, now the subject of federal lawsuits in the United States, Switzerland, https://coinbreakingnews.info/ and the United Kingdom, stole $14 million, and that another processor stole $5.8 million. This was the detail that most shocked cryptocurrency professionals. If you lose the private key to your cryptocurrency wallet—a long, randomly generated password, all but impossible to memorize—your funds are gone forever.
Customers reported that once they arrived, there was nobody in the office, or that there was no cash to be disbursed. Cryptocurrency experts have raised significant questions about the the company’s version of events — including whether or not the founder is really dead. Some 155,000 exchange users were owed up to $200 million in crypto at the time of its bankruptcy.
She is getting on with her life, sure, but there are still 76,000 Quadriga customers waiting for the bankruptcy courts to return a fraction of their losses. When Robertson was searching for new employment, Gerry suggested they take up their newfound wealth and invest in real estate. Robertson setup Robertson Nova, her residential property management company and started buying up real estate. Eventually, the pair owned 16 rental properties to the tune of $7.5 million .
C$28 million held by Costodian, a Quadriga payment processor, was frozen by the Canadian Imperial Bank of Commerce in January 2018. CIBC stated that they could not determine the ownership of the money and could not contact Cotten or Quadriga. In November 2018 the case was decided with the accounts going to the court to decide the ownership individually. Quadriga likely never invested the funds entrusted to it, according to Chainalysis, a cryptocurrency tracking firm. Either the funds were never received or quickly went missing.
Robertson brought in her stepfather to help manage the properties and got herself a personal assistant, who would drink beer with her and listen to her woes when needed. Some Reddit users have suggested that Cotten faked his own death in order to defraud customers and abscond with the funds himself. However, the amount couldn’t be accessed as Cotten was the only person who had the password to offline cold wallets and Quadriga CX later declared bankruptcy. At the time, Quadriga CX had millions of dollars in cryptocurrency, which it owed its 76,000 investors.
Quadriga’s customers are owed C$260 million in cryptocurrency and cash. In this scheme, Cotten would transfer millions out of other people’s accounts in order to invest in exchanges elsewhere, with the excess returns affording him his luxury lifestyle. This was later discovered by accounting firms Ernst and Young in 2019. At the time, the firm said it would be working with management to retrieve the cryptocurrency from the cold wallets. The sum is almost identical to the amount of Bitcoin that has just recently moved. If you have been following the Quadriga saga, you won’t find much new in “Bitcoin Widow.” Robertson is a hard person to feel sympathy for.