QuadrigaCX Moved Huge Amounts Of Crypto Before Owner Died


Canadian crypto exchange QuadrigaCX’s troubles continue with revelations that the exchange is likely not to have had any ether cold wallet.

An in-depth investigation of the exchange’s wallets by blockchain analytics firm Elementus has reportedly shown that QuadrigaCX, over the last three years, didn’t send crypto from hot wallets to cold wallets.

Instead, analysis of the exchange’s wallet addresses on block explorer indicates that the exchange sent funds from the deposit wallet to two addresses and then from these addresses to several centralized exchanges.

One of the addresses that received funds is shown to have been used by another exchange (Bitfinex), with funds regularly sent from this wallet to that crypto exchange.

The other wallet address belonged to QuadrigaCX and was last week identified in a court affidavit as the exchange’s hot wallet.

According to Elementus, the exchange transferred the ether in various small amounts, probably seeking to remain discreet.

Reportedly, there has been no transfer of funds from the two wallet addresses in the last few weeks, which is a period that coincides with Cotten’s death. The QuadrigaCX founder and CEO is said to have died on December 9 last year while in India.

Research, however, shows that vast amounts of ether were moved in the days leading to the founder’s “bizarre” death. Elementus also states that transactions continued to move to various exchanges after the Cotten’s demise.

QuadrigaCX went offline last week, subsequently filing for creditor protection. The Supreme Court of Nova Scotia granted the request and gave the exchange 30 days to find the $190 million the exchange said it owes customers.

Blockchain data shows that almost $1 million in ether moved from QuadrigaCX to other crypto exchanges in December. Several transactions from the platform’s hot wallet saw over 9,000 ETH transferred to top crypto exchanges Binance, Bitfinex, Kraken, and Poloniex.

According to the data, about 5,000 ETH moved to these exchanges between December 2 and December 8, just a day before Cotten’s reported death.

Before these transactions, there had been a widespread outcry from the exchange’s users of facing difficulties during withdrawals for both fiat and crypto funds. But as ethereum blockchain shows, it appears someone found it easy to move large amounts of ether from the exchange within that time.

Overall, Elementus says that QuadrigaCX sent massive amounts of ether to Shapeshift over the last three years. The ether was then converted to bitcoin (and sometimes to Litecoin and bitcoin cash) before it was again sent to Bitfinex.

Per the Elementus report, the total amount of ether sent to other exchanges is way more than the 430,000 ETH Cotten’s widow indicated in the affidavit as being held in ‘inaccessible” cold wallets because the recovery keys were “lost.”

It appears that the majority of the funds sent to exchanges never made it back to the exchange’s hot wallet for customers. Elementus contends that the funds deposited on other exchanges could constitute the “cold wallet” assertion mentioned in the QuadrigaCX affidavit.

However, given the shady transfers, it is highly unlikely that there were funds anywhere as they would have been sent to the exchange’s hot wallet when customer complaints mounted.

Taylor Monahan, the founder, and CEO of MyCrypto doubts that QuadrigaCX maintained any cold wallet. Similar sentiments are expressed by Jesse Powell, the CEO of Kraken, who noted that the exchange has “thousands of wallet addresses known to belong to QuadrigaCX.”

Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.

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