# Cryptos, Quadriga exchange scamming users?



## yousufj56 (Oct 4, 2018)

I had 87k in my quadriga account. Two months ago, i put request to withdraw the funds. I received 20k but have another 67k outstanding. 

First the issue was that CIBC was holding their funds. After a court battle, they got the funds released to them. 

Then BMO refused to take their funds, even though the drafts were issued by the courts. 

It seems that they keep coming up with new excuses as to why we can't get our money. 

Do you guys think that i've been scammed? Is there any way I can tell if they are legitimately trying to get us our money?

They did post a court papers that ruled in their favor. Is there any way we can find out if those papers are legitimate? 

https://s3.eu-central-1.amazonaws.com/files-qcx/18.12.03+-+Order+of+J+Hainey.pdf


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## BoringInvestor (Sep 12, 2013)

I can't speak about the company or the process in any way, but there's a record of the case on the Superior Court of Justice from November.
I can't find this December ruling (but I'm not familiar with the process of when/if motions are searchable).

You can see the November court details here, by searching for the Court File number: CV-18-597240-00CL
http://www.ontariocourts.ca/search-canlii/scj/scj-en.htm


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## sags (May 15, 2010)

Google.........quadriga reddit.

It doesn't look good. Many people are trying to get their cash out. Some as much as $500,000.

It appears the founder and CEO passed away December 9, 2018. 

https://www.quadrigacx.com/gerald-cotten

Some of the other bitcoin related companies are in deep trouble as well. The company that makes the bitcoin computers is heading for bankruptcy. The founder and CEO of that company is a long time bitcoin advocate.

With all the people trying to get their money out of the different bitcoin companies, I am surprised the price is still holding at $3500 USD or so.

But the price is largely manipulated and companies simply delay or refuse to allow withdrawals, or in some cases have issued "tokens" to serve as IOUs.


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## Onagoth (May 12, 2017)

I've dealt with Quadriga for 18 months or so, never in the amounts you have though.

I think most of their problems are created by banks, and not necessarily themselves. In the past I've had significant trouble funding my account.


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## james4beach (Nov 15, 2012)

The entire crypto currency space is pretty much a con game, where the exchanges are a big part of the (systemic) scam. Throughout the crypto currency system, value and dollar worth has been vastly overstated due to a number of common practices. These forms of manipulation have inflated the price for a long time, and the inflated price was used to hype and market to more people, to draw even more cash into the con.

I discovered this when, over a year ago, one of my coworkers started attempting to "cash in" several hundred thousand $ of bitcoin. Each exchange he went to ended up giving him a few thousand bucks but told him he can't liquidate the rest. This is when I realized that all the bitcoin value was fake and overstated -- you can't actually get the money out.

One of these practices that I suspect is that exchanges probably haven't been keeping all the coins earmarked as customer owned. In a period of deleveraging liquidation like we've been in for over a year now, that means that exchanges will struggle to produce cash on demand, because they don't actually have the money (coins).

I can't say whether that's what's happening in your case, but given the history of bitcoin exchanges elsewhere, it's a possibility. I've been suspicious of QuadrigaCX ever since I discovered it operates out of the Bahamas and does not have a proper Canadian business footprint.


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## sags (May 15, 2010)

Scams often follow the same routine and you can tell where you are as a customer by what they are telling you.

1) Some operate in countries where there is little or no regulation, but it isn't required. Regulation in Canada is basically toothless, fines are often ignored and it takes years for any resolution which would be pennies on the dollar at best.

2) The scammers have some kind of exciting new way to earn fabulous amounts of money.........without ever picking up a shovel or packing a lunch box.

3) When the scam has run out the mathematical probability of attracting more "investors", they start pulling the plug on the whole scam and start moving on to their next one.

4) The first thing they claim is they are having problems with their bank, another bank, or some other form of financial problems involving all the money.

5) They tell investors they have hired a top level law firm (they often do, but to represent themselves........not investors).

6) They tell investors the legal fees are mounting and ask each investor to "contribute" to the cost to enable a successful return of investment for everyone.

7) After they have milked everyone for as much as they can, they simply disappear. The rented office is cleaned out. The phones are shut off. Nobody answers any mail or questions.

8) At this point, even the most ardent advocates for the scam start to realize they have been conned and hope the government will bail them out.

9) If they are investigated, charged and convicted by the regulator, years from now they will receive a fine which they simply ignore.

If it is a scam..........and I have no proof that it is, it will be easy to follow the normal pattern of events for such things.


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## Onagoth (May 12, 2017)

james4beach said:


> The entire crypto currency space is pretty much a con game, where the exchanges are a big part of the (systemic) scam. Throughout the crypto currency system, value and dollar worth has been vastly overstated due to a number of common practices. These forms of manipulation have inflated the price for a long time, and the inflated price was used to hype and market to more people, to draw even more cash into the con.
> 
> I discovered this when, over a year ago, one of my coworkers started attempting to "cash in" several hundred thousand $ of bitcoin. Each exchange he went to ended up giving him a few thousand bucks but told him he can't liquidate the rest. This is when I realized that all the bitcoin value was fake and overstated -- you can't actually get the money out.
> 
> ...


Quadriga is registered and located in Vancouver. Has been for as long as I've been dealing with them.

And you are aware that no one is required to store (or keep) their bitcoins with an exchange right? They can be stored offline or even in a paper wallet. They can also be sold directly to individuals (face-to-face) if there is a problem withdrawing funds from an exchange.

Any serious bitcoin investor/trader learned a long time ago not to trust exchanges. They can fulfill some functions, but never trust them. Doesn't make the underlying crypto assets a scam (not necessarily anyways)



The reason why Quadriga is very likely having problems with chartered banks is because it also prevents them from accepting your money. It's been a problem for a while now. If it was a problem just internal to quadriga, funding an account would be no problem at all.


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## james4beach (Nov 15, 2012)

james4beach said:


> The entire crypto currency space is pretty much a con game, where the exchanges are a big part of the (systemic) scam. Throughout the crypto currency system, value and dollar worth has been vastly overstated due to a number of common practices. These forms of manipulation have inflated the price for a long time, and the inflated price was used to hype and market to more people, to draw even more cash into the con.
> 
> I discovered this when, over a year ago, one of my coworkers started attempting to "cash in" several hundred thousand $ of bitcoin. Each exchange he went to ended up giving him a few thousand bucks but told him he can't liquidate the rest. This is when I realized that all the bitcoin value was fake and overstated -- you can't actually get the money out.
> 
> ...


QuadrigaCX may have a legal presence in Vancouver as Onagoth says, but when I went investigating it last year I found that its Vancouver physical presence was minimal, possibly just to have a mailing address. I found that its servers were operating out of the Bahamas. I also found evidence that their principals (one of whom is now dead) were spending significant time physically in the Caribbean. I didn't like the look or smell of it.

An update: QuadrigaCX has been offline for 2 days now. They claim it's for maintenance, but this all has happened after ongoing problems with customers getting their money out as described in this article.

I wish good luck to anyone who is owed money by them.


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## james4beach (Nov 15, 2012)

Quick additional thoughts for anyone who might have significant money at risk here. First, it's probably worth investigating whether this person really died. Second, you might want to start looking into legal options.

It may be worthwhile hiring a private investigator to find out (a) if this person really died, (b) which people associated with the company actually exist within Canada and could be sued, should it come to that.

Think about it: they operate out of the Bahamas, the money gets frozen when CIBC gets suspicious, _then the CEO "dies" while in India_ just when withdrawals stop working? Sounds extremely suspicious to me. Where's the proof he died? Might want to get in touch with local police or RCMP as a starting point.

If you don't want to bother with a lawyer or private investigator, perhaps you can use Google and archive.org to locate past press releases or other public information (or business registration info) to locate the lawyer or PR firm who has worked with the company. Find a real person. Go together with a buddy and pay their lawyer/representative a visit. You might want to bring a hidden camera so that you can capture footage of what their representative looks like, which could be useful if the police ever need to look for them. Another idea would be to get in touch with CBC's Marketplace or Fifth Estate to get the professional journalists to start looking into this.


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## OnlyMyOpinion (Sep 1, 2013)

Noble but ridiculous suggestions imo james, especially the Marketplace/Fifth Estate suggestion. You're talking about the cryptocurrency world here.


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## james4beach (Nov 15, 2012)

Well, the whole crypto currency space is ridiculous. But if I thought someone just ran off with 60K of my money, I would absolutely start looking for someone to sue.


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## Onagoth (May 12, 2017)

james4beach said:


> Well, the whole crypto currency space is ridiculous. But if I thought someone just ran off with 60K of my money, I would absolutely start looking for someone to sue.


Somehow I doubt the depth of your knowledge when it comes to cryptos. Have you ever bought or sold them? Have you reviewed the white papers? Do you have any experience with wallets either electronic or paper?

Anyone who outright declares "the whole crypto current space is ridiculous" seems to me to have a real lack of understanding of the technology and it's capabilities.

I don't know if Quadriga is actually dead now...but anyone who held these assets should have been smart enough to store them separate from the exchange after the whole Mt Gox incident.


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## off.by.10 (Mar 16, 2014)

Onagoth said:


> Anyone who outright declares "the whole crypto current space is ridiculous" seems to me to have a real lack of understanding of the technology and it's capabilities.


No, it's more like anyone who declares that cryptos are worth anywhere near their current valuation has just enough understanding to fool themselves but nowhere near enough to see the whole picture clearly.


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## Onagoth (May 12, 2017)

off.by.10 said:


> No, it's more like anyone who declares that cryptos are worth anywhere near their current valuation has just enough understanding to fool themselves but nowhere near enough to see the whole picture clearly.


Says who? You don't know the fair value of any crypto any better than I do. Value is determined by the market and right now, bitcoins value at least seems to be stabilizing.

And besides that, there is fundamental value in the blockchain technology. The entire crypto space includes far more than just the crypto currencies and coins that trade on exchanges.


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## james4beach (Nov 15, 2012)

The technology is interesting, and much of it is quite sound. The math is sound (hash algorithms, cryptographic routines, etc). I'm not saying any of that is ridiculous.

What I'm calling ridiculous is this ecosystems of shady operators across the world, tons of exchanges that have turned out to be frauds, theft, outright scams. I also think it's ridiculous that such an experimental and unproven new tech (and infrastructure) has been accepted as something to invest in. There is a cult of people who think it's equivalent to precious metals, or that it's going to replace traditional monetary systems.

I'm hearing stories of people who have bought into this hype and poured huge amounts of money, perhaps all their life savings, into crypto currencies... believing the promises of giant returns. This is what's ridiculous.

For me, it's been interesting to watch. I've speculated a bit, bought $300 in coins (now worth $90). I've downloaded the entire bitcoin block chain and filled up an entire hard disk with it. I'll keep my $90 worth of coins, since it's infeasible to sell it anyway. Yeah, it's kind of interesting, and it has potential, but the current environment and ecosystem for all of this is just ridiculous -- it's impractical, unstable, and the space is full of crooks.


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## doctrine (Sep 30, 2011)

They've filed for bankruptcy protection in Nova Scotia.

https://www.quadrigacx.com/

Cryptocurrency exchanges are not what they seem to be. They can only give out as much money as they take in minus fees, hacks and whatever else they lose. If people buy $1M of bitcoin through Quadrigacx, and the price doubles, and they try to withdraw $2M, where does the extra $1M come from? It can only be produced if new people are willing to buy it. Unfortunately, it looks like the liquidity musical chairs ended at Quadrigacx. Hope no one here had money with them.


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## OnlyMyOpinion (Sep 1, 2013)

And they are _"attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets."_
Oops.
People wondering why the CEO Gerald Cotten who suffered from crohn's disease would travel to India of all places, and at this particular time. Oh, he was building an orphanage there. Died suddenly - or did he? Seems a reasonable place to 'get lost'. Speculation that up to $100 million is missing. Hmm, no obituary, no other details, a press release that is now gone. 
This one smells worse than someone in India with bowel troubles.
Was it P.T. Barnum who said "there's a sucker born every minute"?


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## james4beach (Nov 15, 2012)

Anyone who had significant money with them should find a lawyer and start trying to recover assets. I'm not sure at what threshold it becomes worthwhile to do that... perhaps over 20K exposure?


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## fireseeker (Jul 24, 2017)

From the Globe and Mail:



> Dean Skurka, vice-president of finance and compliance at Canadian cryptocurrency trading platform Bitbuy, said he’s concerned that investors who still have money locked up in their Quadriga trading accounts won’t be able to regain all of their funds. Mr. Skurka previously worked in the restructuring and insolvency groups at Fuller Landau, James Williams & Associates and Crowe Soberman, and has been involved in many restructurings.
> 
> “These proceedings will result in a long process, which will likely result in end users experiencing significant loss,” Mr. Skurka said in an e-mail. “There will be a long road ahead for the remaining players to regain the confidence of Canadian consumers.”


https://www.theglobeandmail.com/business/article-crypto-exchange-quadriga-files-for-creditor-protection/


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## Onagoth (May 12, 2017)

Sucks for anyone who lost money...but seriously, how many exchanges have to go bust before people realize that you should never store any crypto assets at the exchange.

I guess it might have been a lot of get rich quick investors who didn't bother researching the history of bitcoin before buying.


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## off.by.10 (Mar 16, 2014)

Onagoth said:


> Says who? You don't know the fair value of any crypto any better than I do. Value is determined by the market and right now, bitcoins value at least seems to be stabilizing.
> 
> And besides that, there is fundamental value in the blockchain technology. The entire crypto space includes far more than just the crypto currencies and coins that trade on exchanges.


Says me. I've heard the "but blockchain!!!" argument hundreds of times and it's still as meaningless. But it's your money to gamble with so I'll just go back to quietly laughing in my corner.


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## james4beach (Nov 15, 2012)

The Quadriga story is reasonably big news. Several people at my office subscribe to a Bloomberg newsletter which talked about this story today


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## stantistic (Sep 19, 2015)

https://www.metafilter.com/179161/Security-through-the-greatest-obscurity-of-all


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## james4beach (Nov 15, 2012)

I think there's a good chance that the keys to the cold storage _was not_ lost, and that this person is not dead. It's very possible that he's still got access and has disappeared, i.e. run off with the money.

Because of this technical complexity and the various forms of sleight of hand that's intrinsic to bitcoin, it's probably difficult for the courts to understand that. I really hope the RCMP starts looking into this.


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## MrMatt (Dec 21, 2011)

james4beach said:


> I think there's a good chance that the keys to the cold storage _was not_ lost, and that this person is not dead. It's very possible that he's still got access and has disappeared, i.e. run off with the money.
> 
> Because of this technical complexity and the various forms of sleight of hand that's intrinsic to bitcoin, it's probably difficult for the courts to understand that. I really hope the RCMP starts looking into this.


Someone just has to watch the "lost" cold wallets. If money starts moving out of them, you know the wallets weren't actually lost.


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## james4beach (Nov 15, 2012)

MrMatt said:


> Someone just has to watch the "lost" cold wallets. If money starts moving out of them, you know the wallets weren't actually lost.


He could wait it out. Alternatively, someone in eastern Russia or Asia would be willing to buy those credentials from him; something he could easily arrange while "dead" in India. Then Quadriga says they've been hacked, and some "horrible Russian hackers" have stolen the money... how tragic. How sad.


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## OnlyMyOpinion (Sep 1, 2013)

Apparently the 'lost' money is closer to $250 million: https://www.coindesk.com/quadriga-creditor-protection-filing
Reddit posts are claiming that money is moving out of the wallets.
I don't have the foggiest idea if they are correct, but it highly entertaining regardless.


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## Onagoth (May 12, 2017)

The major cryptos don't seem to be reacting to this news too much...not surprising though as Quad wasn't a very large exchange.


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## off.by.10 (Mar 16, 2014)

OnlyMyOpinion said:


> Apparently the 'lost' money is closer to $250 million: https://www.coindesk.com/quadriga-creditor-protection-filing
> Reddit posts are claiming that money is moving out of the wallets.
> I don't have the foggiest idea if they are correct, but it highly entertaining regardless.


At a quick glance, the analysis looks very simplistic and unlikely to be correct. I agree about the entertainment factor.


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## james4beach (Nov 15, 2012)

I'm not sure I find massive financial fraud entertaining. There's a difference between a bad investment idea, and theft. This case smells of theft.

White collar crimes are not prosecuted very aggressively in Canada and unfortunately people get away with this kind of thing. That's bad for Canadian business and for our corporate environment in general. If the Quadriga people have committed a crime, and if they just walk away from it, what's going to stop the next guy from doing the same?

Perhaps I'm being pessimistic though. Maybe it was just mismanagement. Notice how crypto currencies provide very easy plausible deniability when it comes to things like money laundering and theft.


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## MrMatt (Dec 21, 2011)

james4beach said:


> He could wait it out. Alternatively, someone in eastern Russia or Asia would be willing to buy those credentials from him; something he could easily arrange while "dead" in India. Then Quadriga says they've been hacked, and some "horrible Russian hackers" have stolen the money... how tragic. How sad.


For the near zero cost to watch for any transactions on the wallets, I'd say waiting it out doesn't make sense.


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## off.by.10 (Mar 16, 2014)

james4beach said:


> I'm not sure I find massive financial fraud entertaining. There's a difference between a bad investment idea, and theft. This case smells of theft.


But we can't prove it was stolen (yet). However unlikely, they might genuinely have lost the coins. How is that not entertaining? It's as if a bank manager was allowed to leave the bank with a suitcase of gold and his plane crashed into the jungle. Or maybe he jumped out first. Who knows... but for sure half the movies coming out of hollywood don't have a plot nearly as good!


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## sags (May 15, 2010)

Why go to all the trouble and hassles of crypto when you can just roll down your car window and throw your money out while driving around ?


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## marina628 (Dec 14, 2010)

I can understand people with small amounts parking 1-2 coins on an exchange but losing $60000+ is just so stupid ,there are so may websites who teach you how to get your own wallet and keep your coins safe.I have used Kraken ,Blockchain ,Bittrex and CoinSquare but the money is on these exchanges maybe 30 minutes long enough to withdraw to bank .I rather deposit into a bitcoin casino and park it there than a wallet like Quadriga ,it wont be the last exchange to go out of business so if you want to be in this space get your own Hard Wallet.


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## OnlyMyOpinion (Sep 1, 2013)

off.by.10 said:


> But we can't prove it was stolen (yet). However unlikely, they might genuinely have lost the coins. How is that not entertaining? It's as if a bank manager was allowed to leave the bank with a suitcase of gold and his plane crashed into the jungle. Or maybe he jumped out first. Who knows... but for sure half the movies coming out of hollywood don't have a plot nearly as good!


It is indeed amazing that some 115,000 people would entrust hundreds of millions of dollars to an online 'alternatecurrency' company run by some guy in his 20's. 
Apparently Quadriga also 'lost' $14MM of ethereum in 2017 due to an 'error'. 
Greed makes people do silly things.


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## doctrine (Sep 30, 2011)

sags said:


> Why go to all the trouble and hassles of crypto when you can just roll down your car window and throw your money out while driving around ?


Because it takes too long to throw $190M out the window in cash. Putting it in cryptocurrency is much faster. Interestingly, this site wants to autocorrect cryptocurrency to "*con*currency". Very appropriate.


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## james4beach (Nov 15, 2012)

Here's a Globe & Mail article:
https://www.theglobeandmail.com/bus...ccess-190-million-following-ceos-death-court/



> Mr. Cotten was diligent in other areas of his life. He signed a will on Nov. 27, less than two weeks before he died. He appointed Ms. Robertson as the executor of his estate, and also outlined distribution of his assets should she not survive him. Those assets included an airplane, property in British Columbia and Nova Scotia, and two pet chihuahuas named Nitro and Gully, along with $100,000 for their care.


What interesting timing, signing your will just 12 days before your death. Maybe he just made a habit of updating his will every week? Too bad he didn't back up his most valuable business asset with the same diligence.

And a wealthy 30 year old passing away from a disease that isn't fatal and which doesn't even affect life expectancy. So tragic.


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## newfoundlander61 (Feb 6, 2011)

"The entire crypto currency space is pretty much a con game" totally agree.


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## sags (May 15, 2010)

The cryto appears to be moving. It could be automated transfers previously set up. 

If they end up at a site where they "mix" incoming bitcoins so they can't be traced when sent back out.....it will be a sure sign of being a scam.

The thing about money scams is they are useless without a way to get the money........sooner or later.


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## OnlyMyOpinion (Sep 1, 2013)

james4beach said:


> Here's a Globe & Mail article:
> https://www.theglobeandmail.com/bus...ccess-190-million-following-ceos-death-court/
> 
> 
> ...


Curiouser and curiouser. Movie plots this good don't come along very often. Wonder if it could it be sold for $190 million?


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## Eder (Feb 16, 2011)

People die due to complications of Crohn's Disease every day...horrible and incurable. My brother has been battling it for years. A burst intestine will finish you in hours if unattended.


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## james4beach (Nov 15, 2012)

Sorry to hear that Eder

But you must admit the timing looks out of the ordinary. Signing a will 12 days before your death, for example. And carefully provisioning 200K for the care of your dogs, but apparently not taking a moment to back up access keys to business assets worth hundreds of millions $.


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## sags (May 15, 2010)

Apparently, the co-founder is a fugitive from the US living in Canada under an alias.

His criminal record shows convictions for fraud and identity theft.

The US would like to have a little talk with him...........if they ever find him.


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## sags (May 15, 2010)

If this guy had $200 million dollars for his dogs, why did his wife post a picture of stacks of paper bank records beside a red candle burning on a 1970s era stove that was in need of a scrub ? I am thinking people with that kind of money don't own those kinds of stoves or candles stuffed into a glass.......but then I wouldn't know how the wealthy live.


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## james4beach (Nov 15, 2012)

sags said:


> If this guy had $200 million dollars for his dogs


No sags that's just silly, not millions! It was only $100,000 for the dogs


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## OnlyMyOpinion (Sep 1, 2013)

sags said:


> Apparently, the co-founder is a fugitive from the US living in Canada under an alias.
> His criminal record shows convictions for fraud and identity theft.
> The US would like to have a little talk with him...........if they ever find him.


Sags is referring to the apparent Omar Dhanani (aka Michael Patryn) connection. There is also wild speculation that Dhanani contacts in India had Cotten poisoned.


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## james4beach (Nov 15, 2012)

https://www.cbc.ca/news/canada/nova...ency-gerald-cotten-court-bankruptcy-1.5006164



> A spokesperson for the Nova Scotia RCMP confirmed to CBC News they are assisting an investigation into QuadrigaCX that is being led by the RCMP's Toronto West detachment.


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## diharv (Apr 19, 2011)

doctrine said:


> They've filed for bankruptcy protection in Nova Scotia.
> 
> https://www.quadrigacx.com/
> 
> Cryptocurrency exchanges are not what they seem to be. They can only give out as much money as they take in minus fees, hacks and whatever else they lose. If people buy $1M of bitcoin through Quadrigacx, and the price doubles, and they try to withdraw $2M, where does the extra $1M come from? It can only be produced if new people are willing to buy it. Unfortunately, it looks like the liquidity musical chairs ended at Quadrigacx. Hope no one here had money with them.


Sounds like the very definition of a Ponzi scheme. I don't know very much about Bitcoin or blockchain aside from what I've read here and a story today on CBC Radio where the "expert" pretty much said the whole cryptocurrency thing is a con . But this current story seems very fishy and is likely to unfold further as time goes on . It's been awhile since there has been an Enron or Madoff scandal or an intriguing con like Bre-X .


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## off.by.10 (Mar 16, 2014)

diharv said:


> Sounds like the very definition of a Ponzi scheme.


Not really. It's very much like the stock market: the only reason you can exchange stock for money is because someone else is willing to give money for stock. That part is fine.

It's likely that many exchanges don't actually have all the money they pretend is kept in customer's accounts nor even all the crypto coins either. But that's a separate issue, not a fundamental problem to the system.

The main issue with cryptos is they have nothing like dividends or assets to give their value a reasonable floor. They have no entity saying "I will always accept this amount of crypto for that service.", as with conventinal currency and governments.


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## OptsyEagle (Nov 29, 2009)

off.by.10 said:


> The main issue with cryptos is they have nothing like dividends or assets to give their value a reasonable floor. They have no entity saying "I will always accept this amount of crypto for that service.", as with conventinal currency and governments.


That is not a small issue. It is a gigantic defect.


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## Longtimeago (Aug 8, 2018)

Cryptocurrency started out as a substitute for real money that could be used online. That idea failed miserably as very few people were interested in using it. But like many things that start out with one intention, it morphed into another product. It became a substitute not for real money, but an alternative on to the forex market. The arbitration or buying and selling of currencies has been around for a long time, cryptocurrencies became a substitute for that. The difference of course is that while trading on the forex markets has long had strict regulations, there have been no regulations on cryptocurrencies and in fact Canada has delayed putting any in place till late 2019 and they will not go into effect until late 2020 as there is 12 month period before new regulations go into effect.

Also, currencies traded by forex traders are backed up with something. Read here and try to compare Bitcoin, etc. to a 'real' currency. https://www.investopedia.com/articles/forex/11/cad-dollar-what-fx-traders-should-know.asp

In simple terms, a forex trader buys and sells currencies on the basis of what they expect to happen with a currencies value relative to other currencies. Will it go up or down, that is what they try to predict. Substituting a cryptocurrency means a trader in those will also be betting on whether their value goes up or down. But relative to what?

Some ask are cryptocurrencies a con? Well, some will debate the answer to that but I look at it like this. A con always works on the same motivation and that is GREED. Now if you buy Canadian dollars or UK Pounds or US dollars, you are betting on them going up or down. But you do not expect them to go up or down by large percentages do you. That isn't generally going to happen since they are backed up by the government and economy of the country that issues them. What government or economy backs up a Bitcoin? 

Cryptocurrencies in fact rely on just one thing to make people money. The rise of their value not relative to other currencies, but simply based on more people wanting to buy in and so drive the price up. That does indeed sound a whole lot like a Ponzi scheme doesn't it. And people have not been buying in based on an expectation of some reasonable (few percent) rise or fall in the value, they have been buying in based on very large increases only, in their value. That of course indicates a motivation of GREED.

Seems to me, that all the hallmarks are there and now the pigeons are coming home to roost as they say. But just as someone falls for, a Nigerian wants to deposit $2mil in your bank account if you just send a few thousand dollars to cover some processing costs, gets no sympathy from me, those losing their money in crytocurrencies will get no sympathy either.

That one person and their personal computer password can result in thousands of people being unable to access their funds, is not in my opinion terrible, it's hilarious.


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## gardner (Feb 13, 2014)

Longtimeago said:


> Cryptocurrencies in fact rely on just one thing to make people money. The rise of their value not relative to other currencies, but simply based on more people wanting to buy in and so drive the price up.


I think the same could be said for gold, and this is not itself evidence of the whole system being crooked/corrupt.


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## james4beach (Nov 15, 2012)

Maybe what these things are really illustrating is how necessary it is to have regulations, legal infrastructure, and government oversight.

Wall Street and Bay Street has a lot of fraud and trickery too, but it's been dramatically curtailed versus the wild west days of investment banking. These days we have OSFI and many regulations (capital requirements, etc) that keep banks in check. Maybe what the crypto currency field is showing us is what we'd get if we let financial people go wild, with no checks or regulations.

For physical gold, there are financial laws that are enforced. Money laundering is not permitted and there are harsh penalties for these violations. Selling counterfeit gold or precious metals is also a crime; I remember stories here in Oregon about some guys being caught for selling Royal Canadian Mint counterfeit bars.

My point is that crypto currencies might not be inherently more of a scam than other parts of finance. It just doesn't have regulations, and laws haven't caught up. It used to be the norm to get fleeced by stock brokers, too. (They still do it to some extent but nothing like it was in the past)


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## james4beach (Nov 15, 2012)

Some people have lost all their retirement money due to the Quadriga's collapse.
https://business.financialpost.com/...eeks-creditor-protection-after-founders-death

So where is the government bailout? Why are there bailouts for GM, Pratt & Whitney, Bombardier, and Trans Mountain but not in this case?

Bailing out Quadriga investors would only cost a fraction of the huge amounts of $ thrown at those other companies. If this is people's retirement money we're talking about, surely it's worth spending a couple million $ of public money. Compare that to the billions spent on oil pipelines and chronically failing industrial manufacturers.

As a country, we seem comfortable paying for business failures (GM, etc) and compensating people for risks... so where's the line?


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## MrMatt (Dec 21, 2011)

off.by.10 said:


> The main issue with cryptos is they have nothing like dividends or assets to give their value a reasonable floor. They have no entity saying "I will always accept this amount of crypto for that service.", as with conventinal currency and governments.





OptsyEagle said:


> That is not a small issue. It is a gigantic defect.


What is the defect? There is no contract that says "I will always accept this amount of currency for that service". The cost of every service varies over time, and currencies vary relative to each other.

The problem here is a lot of people gave a lot of money to "some guy on the internet", without thinking what he was doing with that money, or how he was storing the crypto he was storing on their behalf.

They didn't do their due diligence before forking over their money.

Blockchain is a pretty cool technology. The idea of crypto currency is interesting and potentially quite useful, I really like the idea of not needing to have someone else manage my money for me.


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## l1quidfinance (Mar 17, 2017)

james4beach said:


> Some people have lost all their retirement money due to the Quadriga's collapse.
> https://business.financialpost.com/...eeks-creditor-protection-after-founders-death
> 
> So where is the government bailout? Why are there bailouts for GM, Pratt & Whitney, Bombardier, and Trans Mountain but not in this case?
> ...


The business is tangible. They employ people. What would the governement get in return with this? You would be endorsing stupidity. This is like expecting a bail out when you go to the Casino.


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## MrMatt (Dec 21, 2011)

james4beach said:


> Some people have lost all their retirement money due to the Quadriga's collapse.
> https://business.financialpost.com/...eeks-creditor-protection-after-founders-death
> 
> So where is the government bailout? Why are there bailouts for GM, Pratt & Whitney, Bombardier, and Trans Mountain but not in this case?
> ...


A bunch of people freely gave money to "some guy". They lost the money on a bad investment.
Those who invested in GM before the bankruptcy lost their money on a bad investment too. 
The bailout of GM was to get the new GM running to keep the factories and jobs, not to save investors.


The politics behind other bailouts is crazy, you could have several careers discussion Bombardier.
For that reason I'm not going into the history of the others, but they are a mix of practicality and politics. 

We shouldn't pay for business failures, and we typically don't bail out the investors when they go fail. I can't think of any circumstances where there was a bankruptcy and the government paid money to the shareholders. 

As far as corporate welfare, it's a big problem and I don't agree with it, but there is some logic to it. However Corporate welfare isn't reimbursing investors for failed investments.


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## doctrine (Sep 30, 2011)

gardner said:


> I think the same could be said for gold, and this is not itself evidence of the whole system being crooked/corrupt.


The difference is that you can't lose $200 million worth of physical gold on your laptop.


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## james4beach (Nov 15, 2012)

doctrine said:


> The difference is that you can't lose $200 million worth of physical gold on your laptop.


Exactly. And it's hard to physically steal $200 million worth of gold, that's nearly 5000 kg of metal.

Also doesn't get destroyed in a fire.


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## OnlyMyOpinion (Sep 1, 2013)

james4beach said:


> ... So where is the government bailout? Why are there bailouts for GM, Pratt & Whitney, Bombardier, and Trans Mountain but not in this case? Bailing out Quadriga investors would only cost a fraction of the huge amounts of $ thrown at those other companies. If this is people's retirement money we're talking about, surely it's worth spending a couple million $ of public money. Compare that to the billions spent on oil pipelines and chronically failing industrial manufacturers. As a country, we seem comfortable paying for business failures (GM, etc) and compensating people for risks... so where's the line?


I hope you were kidding here. Otherwise it ranks as the most ridiculous thing you've ever posted.


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## james4beach (Nov 15, 2012)

OnlyMyOpinion said:


> I hope you were kidding here. Otherwise it ranks as the most ridiculous thing you've ever posted.


I was trying to poke fun at bailouts. But I really wish we didn't waste public money on bailouts for GM, Bombardier, Kinder Morgan, etc. Corporations sometimes fail, and it's normal (and healthy).


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## kcowan (Jul 1, 2010)

james4beach said:


> I was trying to poke fun at bailouts. But I really wish we didn't waste public money on bailouts for GM, Bombardier, Kinder Morgan, etc. Corporations sometimes fail, and it's normal (and healthy).


Your three examples have all proven to be folly and a waste of hard-earned taxpayer money.


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## off.by.10 (Mar 16, 2014)

MrMatt said:


> What is the defect? There is no contract that says "I will always accept this amount of currency for that service". The cost of every service varies over time, and currencies vary relative to each other.


My electricity bill disagrees with you. Sure, the cost will vary slowly over time. But you can reasonably depend on the service always being there and the currency always being accepted for it. Not so with cryptocrap.

And about gold: not at all the same as the supply changes according to price (unlike cryptos which you can create out of thin air) and there is a baseline level of demand from industrial uses.


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## MrMatt (Dec 21, 2011)

doctrine said:


> The difference is that you can't lose $200 million worth of physical gold on your laptop.


You're right, crypto isn't gold. 
You can't securely store $200 million in physical gold in a few dozen characters of text, or transfer it anywhere in the world in a few minutes.

Cryptocurrency and a physical item are completely different things.


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## OhGreatGuru (May 24, 2009)

OnlyMyOpinion said:


> Curiouser and curiouser. Movie plots this good don't come along very often. Wonder if it could it be sold for $190 million?


This just gets better and better, doesn't it? It's like living (vicariously) in a soap opera or a made-for-tv show. Who needs screen writers when you can get your plot outlines from the daily news? Shall we start a pool on how long it takes for the movie to come out?


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## james4beach (Nov 15, 2012)

https://www.cbc.ca/news/canada/brit...ryn-canada-cryptocurrency-creditors-1.5009625



> Four years ago, QuadrigaCX founder Gerald Cotten grinned as he helped two preschoolers try out Canada's first bitcoin ATM in Vancouver.
> 
> *A toddler fed a $100 bill into the machine, converting it to bitcoin with the touch of a button.*
> 
> "Done, now your wallet is funded," said Cotten, in a video shot by the two girls' dad at the Vancouver office of cryptocurrency exchange Quadriga, which allowed clients to buy cryptocurrencies. The office has since closed.


Wow... I guess he was always a humanitarian! It must be why he volunteered at an orphanage in India.


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## Pluto (Sep 12, 2013)

Apparently this gerald Cotton guy really did die, so no conspiracy to steal the money. I know next to nothing about crypto currency as it makes my head hurt to think about it. 

Apparently people collectivly gave him some 250 million US for Bitcoin or some type of coin and the only records are on his encrypted laptop; and since no one has the password for his laptop, no one has access to the money. Is that the circumstances? Presumably he banked the money somewhere. So who gets to keep the money? His bank?


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## sags (May 15, 2010)

I wouldn't presume there is no conspiracy to commit fraud, just because a would be perpetrator might be dead.

Court records reveal the company has $180 million of customer money, which is purported to be inaccessible.

Researchers and media investigations have revealed some interesting information.

The co-founder is a fugitive from US justice. It is reported he may be somewhere in Asia. He has used many different aliases and was convicted of identity theft.

The wife of the CEO has also used many different aliases to buy 16 or more real estate properties as well as other high value items. 

There was a trust formed into which all the assets were placed and the wife is listed as the sole corporate officer and director.

The will of the deceased left most of the assets to his wife, but some large assets to his wife's parents.

There are companies within companies. There is no evidence of the $180 million in "cold wallets" on the blockchain. 

There is evidence that many of the coins were transferred to other exchanges, including one that mixes coins together so they can't be traced to their final destination.

One question being asked is where all the money came from for all these purchases ? The company didn't generate that kind of income for the owners.

Spending investor money to cover expenses and make purchases, and hiding assets in a web of companies and bank accounts is how large frauds often work.

I am thinking the husband's death may have interrupted a scam in progress, which left no time to hide everything before they could claim they were "hacked".

Many fraudsters carry on business until they get caught, simply due to greed.


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## gardner (Feb 13, 2014)

doctrine said:


> The difference is that you can't lose $200 million worth of physical gold on your laptop.


Well, of course not. And that possibility probably *is* evidence of the greater potential for corruptness in crypto-currency schemes. And lest anyone think I am defending crypto-currency, I am not at all. I would never invest in such a thing, and would likely never buy or use any. I *do* believe that the players are partly or even mostly corrupt and that people who put real money into this system should not be protected by any sort of government bailout.

I was only trying to address the argument that it is hoarders driving the price of crypto-currency, rather than intrinsic value, as evidence of corruptness in the system. And it that regard, I would stand by the assertion that it is is hoarders driving the price of gold, mainly, versus an actual economic value in the stuff, and that is not, of itself, evidence of corruption.


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## gardner (Feb 13, 2014)

Pluto said:


> Apparently this gerald Cotton guy really did die, so no conspiracy to steal the money.


Umm. It seems to me that crooks can die too. The actuality of his death would have no bearing on whether his dealings were or weren't legitimate.


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## gardner (Feb 13, 2014)

james4beach said:


> Maybe what these things are really illustrating is how necessary it is to have regulations, legal infrastructure, and government oversight.


Yes and no. Regulation, oversight and taxes would make the whole thing safer alright, but it would also undermine most of the value of the crypto-currency system. It is precisely because you can create and trade them utterly anonymously that they are desirable at all. You can use them to perform illegal or impossibly regulated transactions, for example. Add a bunch of regulation and oversight and you might as well do FINTRAC'd EFTs.

And I think this, also, is evidence that the system is open for corruption and should be assumed to be unsafe by any thinking person.


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## james4beach (Nov 15, 2012)

I work at a firm that does consulting work in computer security, and our firm is frequently approached by crypto currency related companies. They are trying to recruit me all the time, actually, since I work in cryptography, digital security, data protection, etc. I know this space pretty well.

Our company has met with a couple of these firms and turned down their invitations to join them. We just thought there was something fishy about the firms, and we still avoid them.

On the technology side, things are also pretty messy. I spent some time looking at the details of bitcoin wallets, keys, and transaction exchanges. As someone with an expertise in cryptography, the conclusion I came to is that managing bitcoin (as an asset) *is extremely tricky* with many potential pitfalls. For most users, even advanced computer users, there are many possible ways to lose your money, fail to properly back up your wallet, accidentally blow away your money, get robbed, etc.

Other crypto currencies may have improved on this but at least for bitcoin, the technology is very tricky. There are many articles on the internet that paint a rosy picture of how easy bitcoin assets are to manage. In reality, the asset is very difficult to work with -- there is huge complexity in the protocols and methodologies. Even as a cryptography expert myself, I would not put any significant money into bitcoin just because I am not willing to put in the immense time and effort to do it properly.

Most holders of bitcoin overestimate their understanding of that complexity. There are two important results of that:

(1) This huge complexity in crypto currencies creates a massive information asymmetry between the few bitcoin experts out there, and the masses of uninformed or amateur bitcoin enthusiasts. This makes it pretty easy for the true experts to rob from the amateurs. You might notice, watching youtube, that crypto currencies seem to especially appeal to youngish people who are novice investors and conspiracy theorists who are against global banking. The asset class intrinsically attracts people who have limited knowledge and overconfidence. Crypto currencies are the perfect environment for fraud and theft.

(2) The damned things are just difficult to work with, period. The Quadriga CEO may himself had no idea how to actually manage the wallets properly. It is not as simple as just backing up one wallet... it is far more complex than that.


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## sags (May 15, 2010)

Great assessment James, and all anyone has to do is go to a Bitcoin talk forum and look at all the threads from people that say...._I lost all my bitcoins. Can someone help get them back._

All of those failures, from individuals and companies are summarily dismissed by the bitcoin faithful with a "it sucks to be you" attitude. 

They are so blinded by the conviction of vast riches they can't see the weaknesses and dangers.

If your money disappears in a bank you can get your money restored. With bitcoin....it is gone and no help is coming.


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## Pluto (Sep 12, 2013)

OK, I see your point. Looks like lots of room for fraud, and error. Sigh. Looks like the days of a good old fashioned train robbery are over.


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## james4beach (Nov 15, 2012)

Here's an example of the complexity of these crypto currencies and how the scam artists might be technologically ahead of law enforcement:

The company reported the assets as inaccessible, but it's actually very hard to verify that this is true. Coin transactions work by shifting assets from "wallet" (digital address) to another wallet (address). This can be done in many hops... it's a money laundering dream.

From what I've been reading, the courts and public are not positive of the wallet address that stores the supposed inaccessible assets. Therefore it's very difficult to figure out whether or not assets are actually leaving the current storage place, i.e. whether they are stolen or lost.

This can probably be reverse engineered through enough forensic work, but the transactions span countries and different companies. I doubt that the Canadian police have enough resources to find out. And the theft was from "nobodys", relatively small people who don't have connections or enough clout to demand justice.

This crypto currency stuff is a criminal's dream.


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## MrMatt (Dec 21, 2011)

sags said:


> Great assessment James, and all anyone has to do is go to a Bitcoin talk forum and look at all the threads from people that say...._I lost all my bitcoins. Can someone help get them back._
> 
> All of those failures, from individuals and companies are summarily dismissed by the bitcoin faithful with a "it sucks to be you" attitude.
> 
> ...


That's actually the point.

With bitcoin, and other crypto currencies YOU and nobody else has complete control over your wallet. It is theoretically impossible for someone freeze or seize your assets.

With the current banking system, it is trivial for others to freeze or seize your money, in fact you don't have ANY control of it at all, you ask them and maybe they'll do what you want. 

So the question is do you want to let others have control of your money, and they might let you access it under their conditions?
Or do you want to be the ONLY one in control of your assets.

There are a lot of consequences to that decision, most importantly that there is no super powerful authority that can take control from you or the other crypto users. 

The who problem with exchanges boils down to "I sent all this money to some guy, and I'm not sure what he did with it, now it's gone". 
He stole or lost it, doesn't really matter, it's gone.

The real question is what made you think it was a good idea to give him money? 
How do you know you got what you were promised?
What steps did you take to verify they were trustworthy?
What was your plan if things went wrong?

I think the "sucks to be you" attitude is appropriate. Anyone who asks "Can someone help get them back?" clearly didn't know what they were getting involved with. It's the crypto equivalent of asking why a flashlight doesn't work without batteries. It's also why all serious crypto experts avoid using coin exchanges. 

I read an article on someone who lost money in the Quadriga exchange collapse. He mentioned that he asked his computer security expert friend on his opinion. His friend remarked it looked amateurish and he wasn't use it. Then the author of the article invested with Quadriga anyway.

The mainstream isn't ready for cryptocurrencies, most crypto "investors" are simply gamblers have no idea what they're doing, and aren't doing anything even close to proper due diligence. 
I spend more time researching listed stocks for a $5k investment than most people spent learning about cyrptocurrencies before sending $100k off to "some guy without a phone number"


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## MrMatt (Dec 21, 2011)

james4beach said:


> Here's an example of the complexity of these crypto currencies and how the scam artists might be technologically ahead of law enforcement:
> 
> The company reported the assets as inaccessible, but it's actually very hard to verify that this is true. Coin transactions work by shifting assets from "wallet" (digital address) to another wallet (address). This can be done in many hops... it's a money laundering dream.
> 
> ...


Current research is suggesting that they might not have ever had cold wallets and they were simply pocketing the deposits.
Seems they were trying to keep just enough in the Quadriga system so it would appear to function.


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## james4beach (Nov 15, 2012)

MrMatt said:


> Current research is suggesting that they might not have ever had cold wallets and they were simply pocketing the deposits.
> Seems they were trying to keep just enough in the Quadriga system so it would appear to function.


I'm increasingly thinking that too. They never stored the coins... just took the money as it came in. And if true, that _does_ in fact make it a fraud -- nothing to do with crypto currencies at all.

The CEO is a 30 year old who owns two properties and an airplane. Did he always have those?

I give about 80% chance QuadrigaCX is a total fraud and criminal charges will result, or at least many civil suits. This is just my opinion.


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## sags (May 15, 2010)

Anyone who supplied this company with their personal information may want to change bank accounts or credit cards etc.


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## OnlyMyOpinion (Sep 1, 2013)

https://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=HAGB1914

... The monitor's third report indicated six so-called cold wallets used to store digital assets offline have been found, but all of them are empty. "The applicants have been unable to identify a reason why Quadriga may have stopped using the identified bitcoin cold wallets for deposits in April 2018,"... 

Meanwhile, the monitor confirmed it had also became aware of three other potential cold wallets, but they were also empty. 

The monitor also found 14 user accounts on the QuadrigaCX platform that were "created outside the normal process," using a number of aliases...
More importantly, the accounts were created internally "without a corresponding customers and used to trade on the Quadriga platform," the monitor reported.
"The monitor was further advised that deposits into certain of the ... accounts may have been artificially created and subsequently used for trading on the Quadriga platform." Transaction data indicates there was a significant volume of activity associated with these accounts, including withdrawals of cryptocurrency to wallet addresses not associated with Quadriga, the report says...

Meanwhile, the monitor has been trying to secure data from the trading platform that includes information about account balances and transactions. That information is stored in the cloud with Amazon Web Services Inc. (AWS), but the monitor has not been able to gain access to that data because the contract was in the name of the company's late co-founder, Gerald Cotten... adding that consent from Cotten's widow, Jennifer Robertson, was not enough for Amazon.


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## OnlyMyOpinion (Sep 1, 2013)

Turns out you don't need to fake your death to steal bitcoin:

_It is alleged that ... 112 fraudulent transactions had been made at bitcoin kiosks in seven cities across Canada. Fifty-one of these fraudulent transactions occurred in Calgary, with the rest occurring in Toronto (17), Montreal (27), Ottawa (1), Hamilton (1), Winnipeg (13) and Sherwood Park (2).

It is believed that the suspects were committing “double-spend” attacks, where a suspect attended a bitcoin kiosk and successfully withdrew money before remotely cancelling their transactions prior to the bitcoin company processing the withdrawal. The total dollar loss to the bitcoin company as a result of these fraudulent transactions was $195,000._

https://www.canadapolicereport.ca/2...ublic-assistance-in-cybercrime-investigation/


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## james4beach (Nov 15, 2012)

Here's a letter from a lawyer who was QuadrigaCX's regulatory attorney back in 2015: https://www.coindesk.com/from-law-to-lawlessness-bits-of-the-untold-quadrigacx-story



> Like everyone else, there are a lot of other things I don’t know about QuadrigaCX – I don’t know if there is $137 million parked in a few wallets; I don’t know why the bitcoin addresses that were supposed to be holding $92.3 million turned up empty; I don’t know why the wallet address holding $44.7 million of other cryptos can’t be disclosed; I don’t know why no law firm has applied for a Mareva injunction to preserve assets; I don’t know why the litigation is in Nova Scotia when British Columbia Courts have jurisdiction and the witnesses and evidence are in British Columbia; I don’t know why there are statements that there are no records; and I don’t know why the shareholders haven’t tokenized the exchange and made it operational so that customers can start to recover some of their assets.


I interpret this as polite/careful lawyer speak, where she wants to say "it's a giant fraud" but knows better than to write that directly.


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## james4beach (Nov 15, 2012)

Some more updates: Ernst and Young has completed a report on QuadrigaCX

https://www.coindesk.com/quadrigacx-has-21-million-in-assets-and-owes-160-million-ey-report


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## sags (May 15, 2010)

$140,000,000 just disappears into the stratosphere and people are supposed to trust crypto currency because this time it didn't happen to them ?

I think if all the money laundering from China and elsewhere was removed from bitcoin it would completely collapse and be worthless.


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## MrMatt (Dec 21, 2011)

sags said:


> $140,000,000 just disappears into the stratosphere and people are supposed to trust crypto currency because this time it didn't happen to them ?
> 
> I think if all the money laundering from China and elsewhere was removed from bitcoin it would completely collapse and be worthless.


The money didn't just "disappear" someone stole it.

Anyone who just hands money over to "some guy" in an unregulated industry without knowing what they're doing, is taking a huge risk.
I have a sliver of crypto, and I know I have it because I have the keys, it's mine, nobody can take it.


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## gardner (Feb 13, 2014)

MrMatt said:


> The money didn't just "disappear" someone stole it.


Most likely. But it might have been lost too. It would be like buying gold bars and then dropping them in the ocean.


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## sags (May 15, 2010)

Another $40 million dollar "hack" of an exchange the other day.

The criminals enjoy complete freedom to operate as law enforcement has no resources to locate or catch them.

The prices listed on exchanges are highly manipulated and are often ghost sales that never existed. They serve the purpose of luring in innocent investors who believe all the hype.


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## james4beach (Nov 15, 2012)

sags said:


> The prices listed on exchanges are highly manipulated and are often ghost sales that never existed. They serve the purpose of luring in innocent investors who believe all the hype.


You're right. It seems that virtually all crypto currency pricing is fake, meaning that the printed quotes are just a hoax:
Majority of bitcoin trading is a hoax, new study finds



> *An analysis published by Bitwise this week shows that 95 percent of bitcoin spot trading is faked by unregulated exchanges.*
> . . .
> The analysis showed that "substantially all of the volume" reported on 71 out of the 81 exchanges was wash trading, a term that describes a person simultaneously selling and buying the same stock, or bitcoin in this case, to create the appearance of activity in the market. In other words, it's not real.
> . . .
> ...


That last part is pretty interesting. Buying the hype of bitcoin, the CME listed bitcoin futures and expected a flood of demand. Instead, there was relatively little activity. This is because the scam artists cannot perpetuate the hoax of crypto currencies in regulated public markets. They need unregulated markets where they can paint the tape.

This also explains why my coworker, who had substantial (notional) bitcoin wealth, was unable to sell and liquidate his holdings back during the high prices of late 2017. He went from one unregulated exchange to the next, trying to sell, but each exchange told him they would not fulfil the orders.

It's one thing to have a bubble, but it's another thing to have fake pricing and just a hoax of a bubble.


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## MrMatt (Dec 21, 2011)

sags said:


> Another $40 million dollar "hack" of an exchange the other day.
> 
> The criminals enjoy complete freedom to operate as law enforcement has no resources to locate or catch them.
> 
> The prices listed on exchanges are highly manipulated and are often ghost sales that never existed. They serve the purpose of luring in innocent investors who believe all the hype.


Part of the point of crypto is to avoid reliance on/control by governments and regulation. It's not surprising that the very tools it was created to avoid aren't very effective.
If you want to partake in a regulated market, there is one.


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## sags (May 15, 2010)

James...........

I can't verify this is actual fact, but I can verify this is what our car salesman told me directly.

I was in buying a new truck and there was a Corvette sitting outside ready to go. I joked and asked my salesman if he sold that car and he surprised me by saying he did.

He said he sold the Corvette and a new truck (for his dad) to a young guy who has made a fortune in Bitcoins and other crypto currencies.

He said the guy is an excellent computer programmer and was asked to create the software for one of the first exchanges.

He was offered a pretty good fee for doing so, but he offered instead to get paid a tiny fee on every transaction. As the exchange owners were looking to save money they agreed to the deal.

His software is used by several exchanges now and he is making a ridiculous amount of money every day.....more money than he can spend.

I don't see any reason my salesman would make up the story, so apparently at least someone is making a lot of legal money from the fraudulent transactions on bitcoin exchanges.

At least until they shut down and disappear with all the money.


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## sags (May 15, 2010)

But then the cynic in me takes over and I wonder if the story is true.

Not the story the salesman told me, but the story the customer told the salesman to start with.

I wonder why exchanges that pump up volume transactions and rip people off for their money would bother paying a computer program his ongoing fee.

There is another possibility.

Maybe the fee is a fake business transaction that defers cash to buy expensive vehicles that can be shipped to other countries for sale ?

This is the kind of web the criminals create so law enforcement have difficulty following the money.

Who knows the truth.

I was once involved in flipping domain names (pretty unsuccessfully I would have to say) and there suddenly appeared some "rich guy from Columbia" who was buying up lame and worthless domain names for big dollars. 

The "sales" were reported by the domain names sales websites. Everyone was frantically and unsuccessfully trying to sell him their domain names.

Then the US announced an investigation into the sales of domain names and the guy disappeared. People concluded it was all money laundering moving money from Columbia to the US.


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## marina628 (Dec 14, 2010)

sags said:


> James...........
> 
> I can't verify this is actual fact, but I can verify this is what our car salesman told me directly.
> 
> ...


I know at least 20 millionaires who got into bitcoin for gambling ,not that they were smart it is just Calvin Ayre and other offshore casinos/poker rooms offered it as a method and about 5 years ago they will only pay out via bitcoin.I know a guy who bought bitcoin at .17 cents , I got some about $3.00 a coin ,bought it from a guy who needed paypal lol .Been buying and selling it ,sometimes I will lose $40 in my sleep and sometimes I will make $200 but I sell most of it these days.A few days ago I received around $4000 when it was around $5000 a coin and it went up 20% while the system was clogged.I read there was backlog and 6-7 hours to get the 3 transactions confirmed in blockchain so I waited to sell.
People try to sell this as investment but it was created to avoid governments and taxes and the online gambling community is likely top 10 holders of this with I suspect Calvin Ayre being the biggest one.


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## sags (May 15, 2010)

Some people paid nothing for bitcoins but mined them easily on their home computer.

As bitcoins rose in price though, it would be very difficult for people to resist selling them all the way up to the $20,000 level it was.

Many people were happy to get your 17 cents for their free bitcoins.


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## marina628 (Dec 14, 2010)

I got 4 payments this month ranging from $300 -$4000 ,waiting on $2000 and $308 from last night poker games .I just put my voice here in case somebody sees it today at nearly $8000 and thinking it will go up to $20,000 .I have not logged into bittrex where I have about 40 alt coins since November ,I threw $10 -$100 on each of them will be fun to check soon to see hw that gambling went lol.
If i were not gambling online I doubt i would have 1 cent in Cryptos.


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## marina628 (Dec 14, 2010)

sags said:


> Some people paid nothing for bitcoins but mined them easily on their home computer.
> 
> As bitcoins rose in price though, it would be very difficult for people to resist selling them all the way up to the $20,000 level it was.
> 
> Many people were happy to get your 17 cents for their free bitcoins.


Even when i sold most at $4000 I never kicked myself for not waiting for 20k .We had at least one person here on the forum who lost $60,000 and I do know some people who also lost because they did not have the backing to ride it out long term and got in at 8k .I did alot of trading with my friend in 2016 /2017 buy a coin in morning sell a few hours later for 20% ,stellar /was a good one for that.April 10 ,2018 last time I actually I opened that wallet and i have 113 different coins there some may not even exist anymore .It was just some fun and experimenting for me,when I have time I will take a peek and see how much I have there .


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## kcowan (Jul 1, 2010)

I love it! Asset allocation Marina-style.


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## james4beach (Nov 15, 2012)

marina628 said:


> Even when i sold most at $4000 I never kicked myself for not waiting for 20k


It's doubtful you would have ever been able to sell at 20K, even if your timing was right. There's evidence out there that the prices were fake. I have a coworker who tried selling somewhere above 15K but he wasn't able to (the exchanges refused). That's about the time I started realizing the prices are fake.

If you've made any profit, you should be happy. You could have easily lost it all in one of these crooked exchanges.

Personally, if I wanted to gamble I'd probably do it using TQQQ and SQQQ (leveraged QQQ up & down). Today for example SQQQ was up 10%. At least it's transparent pricing, great liquidity, directly tracks a real index, and you can do it through a regular brokerage.


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## james4beach (Nov 15, 2012)

Another couple of articles
https://www.cbc.ca/news/canada/nova...ill-missing-quadriga-s-cold-wallets-1.5040099
https://www.cbc.ca/news/canada/nova...currency-bankruptcy-ernst-and-young-1.4364467



> Cold wallets that were supposed to hold up to $180 million of Quadriga clients' money have been empty since last April, according to blockchain experts at court-appointed monitor Ernst and Young.


Here's a recap of the timeline

*April 2018*: the accounts (which only Cotton was believed to have access to) were emptied, with little trace.

*November, 2018*: Gerald Cotten signed his will. He leaves behind $12 million in assets: properties in BC and NS, a Lexus, airplane, and yacht. What a successful 30 year old!

*December 2018*: 12 days later, Gerald Cotten dies while opening an orphanage in India. The company does not inform the public of this horrible, sad death until after the web site goes offline.

*January 2019*: the web site goes offline and people are unable to access their money.

The 30 year old is said to have died of Crohns disease. It might be worth noting that, according to the Crohn's & Colitis Foundation, "Death due specifically to Crohn’s disease or its complications is uncommon. However, people with Crohn’s disease have a statistically slightly higher overall mortality rate than would otherwise be expected compared with the general healthy population."

~~

One possible explanation is that Cotton embezzled/laundered the money. How wealthy was he before QuadrigaCX? Did he inherit those millions?


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## marina628 (Dec 14, 2010)

james4beach said:


> It's doubtful you would have ever been able to sell at 20K, even if your timing was right. There's evidence out there that the prices were fake. I have a coworker who tried selling somewhere above 15K but he wasn't able to (the exchanges refused). That's about the time I started realizing the prices are fake.
> 
> If you've made any profit, you should be happy. You could have easily lost it all in one of these crooked exchanges.
> 
> Personally, if I wanted to gamble I'd probably do it using TQQQ and SQQQ (leveraged QQQ up & down). Today for example SQQQ was up 10%. At least it's transparent pricing, great liquidity, directly tracks a real index, and you can do it through a regular brokerage.


James I know a guy who lives in Toronto that sold at $19000 USD and cashed out $1,400,000 .I was selling partial coins in that range but as I stated all of mine was from playing poker online , they pay me and i cash out .There are few times it has taken me as much as 13 hours to sell but in my friends case he did multiple transactions ,one day over $400,000 without issue.


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## marina628 (Dec 14, 2010)

Just wanted to add for gamblers we can sell bitcoin to virtual wallets for cash such as Neteller , Ecopayz,Skrill then withdraw from these wallets into our Bank accounts .You are not stuck with coinbase , coinsquare etc .So your friend may have been trying to take from blockchain to coin square then sell coins ,our gambling community is much more savvy than this lol.Besides it is my bankroll so needs to be flexible .I feel bad speaking in finance forum about this but just wanted to pull the blinders off a bit


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## james4beach (Nov 15, 2012)

A message to yousufj56 (the original poster) and others here who have been affected by this:

Posted just yesterday, the FBI is investigating QuadrigaCX and is seeking information from potential victims. If you've been affected, take a look at:
https://www.fbi.gov/resources/victi...eking-victims-in-the-quadrigacx-investigation
https://www.cbc.ca/news/canada/nova-scotia/fbi-quadrigacx-cryptocurrency-exchange-1.5161853

Both the RCMP and FBI are investigating QuadrigaCX. A potentially complicating factor is that you should generally not ever talk with law enforcement without first consulting with a lawyer, even if you're not the one being investigated. So the best advice I can give, to people who were affected, is to first consult with a lawyer and only then consider communicating with the FBI and RCMP.


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## sags (May 15, 2010)

This is a story about how easy it is to fleece people and get away with hundreds of millions of dollars. The money is somewhere and somebody owns it.

The owner had $12 million in assets. A pittance compared to the total. Where is all the rest of the money ?

I think there is a 100% chance all the bitcoins went into a "mixer" website that combines all incoming bitcoins with other bitcoins, to foil police from following the transaction trail.

If bitcoin is legit.............why do they have mixer sites ?


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## Fedorici (Jun 5, 2019)

I think Bitcoin is doomed. Etherium and other common crypta as well. This is just the step, the real crypoc will be smt other.


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## marina628 (Dec 14, 2010)

sags said:


> This is a story about how easy it is to fleece people and get away with hundreds of millions of dollars. The money is somewhere and somebody owns it.
> 
> The owner had $12 million in assets. A pittance compared to the total. Where is all the rest of the money ?
> 
> ...


Sags my bet is somebody had the keys ,not sure if it was him but these coins were removed and moved around .There has been many posts about activity around time he died but I have not followed it closely as I never used these guys.Coinbase is now linked to Paypal too but the bitcoin were suppose to be anonymous seems governments and banks are trying to get everyones ID .On blockchain for instance they will give you $25 free to add your name and email if people are saving thousands not paying taxes they will not give it up for $25.That is the issue with this case they may get wallet addresses but not link names to everyone of them.Bitcoin dropped 11% in past 5 days .


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## kcowan (Jul 1, 2010)

What amazes me in that the SEC allows this to happen under their noses. By the time they notice, it is too late to close the barn door. Remember BreX?


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## OhGreatGuru (May 24, 2009)

According to this story https://www.bloomberg.com/news/arti...nges-are-facing-biggest-regulatory-hurdle-yet and similar ones in Bloomberg, international authorities will soon be cracking down on bitcoin exchanges because they are so convenient for money laundering.

The issue with QuadrigaCX was not money laundering, so much as losing depositors' funny money, either intentionally or through corporate incompetence. The CEO was the only one in the company with the encryption key to the "vault", and he disappeared. This is corporate financial mismanagement on a grand scale. If the speculations that he faked his death are true, it is criminal fraud. Either way it means there is no real financial accountability in these businesses. You might as well give your money to a complete stranger and tell him "Here, keep this under your mattress for me."


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## james4beach (Nov 15, 2012)

Not only did the guy with the only key to the "vault" disappear, but the contents of the vault were also cleaned out. So I think it sounds more like embezzlement or theft, because (by my reading of the articles) those assets weren't just lost as initially reported, they were pulled out when they shouldn't have been pulled out.

Another problem with these crypto currencies is that there just isn't a lot of market liquidity and depth. The whole thing is like a bunch of penny stocks being traded among very few participants... this can be used to run the price one way or the other, but is that something you want to store your money in? With such limited liquidity and limited participants, there is no price stability. More recent research has uncovered that a huge number of trades at the exchanges were in fact wash trades, with one person trading against themselves. For a long time this created the perception of more liquidity than there really is.

To me, crypto currencies are more like unregulated penny stocks. It shouldn't be particularly surprising when the price goes up (or down) dramatically, and yes they will be very exciting.


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## sags (May 15, 2010)

The latest is that the founder withdrew much of the $80 million cash and transferred $190 million worth of bitcoins and other coins to exchanges where they could be traded.

He lost some money on the trades and exchange fees, but it is impossible he lost all the money. There is no doubt it was a fraud perpetrated by the founder.

It would be difficult to believe his wife knew nothing about the sudden money they were spending, and I suspect the founder is alive and well in Asia under an assumed name.

The co-founder of the exchange is wanted by the US for fleeing after being convicted of identity theft and fraud.


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## OnlyMyOpinion (Sep 1, 2013)

Case of defunct QuadrigaCX cryptocurrency exchange could shift to Toronto court


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## sags (May 15, 2010)

Still over $100 million missing.

The money went somewhere. The bitcoins were sold somewhere. If the blockchain is so good at recording transactions why aren't they there ?

Something isn't adding. The claims of blockchain don't seem to match the reality.


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## m3s (Apr 3, 2010)

There's nothing wrong with blockchain.

Using a scam exchange like Quadriga is the equivalent of depositing your money at a scam bank.

It's ill advised to leave significant crypto on any exchange


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## james4beach (Nov 15, 2012)

Wow!

Quadriga CEO’s Widow to Return $9 Million of Estate Assets

The CEO's wife is going to return $12 million CAD worth of assets from the estate back to the company. This is great news for affected people, and the trustee is saying that this will "materially improve the expected distributions to Quadriga shareholders". (but does 'shareholders' mean people who stored assets with them?)



> “I have now entered into a voluntary settlement agreement where the vast majority of my assets and all of the estate’s assets are being returned to QCX to benefit the affected users,” she said. “These assets originally came from QCX at the direction of Gerry.”


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## sags (May 15, 2010)

There is $260 million missing. Where is the rest of the money ? That kind of money doesn't just vanish. Why can't authorities find the silent partner hiding in Asia somewhere ?

I still think it is all a scam and the guy is still alive and hiding out with his partner in remote Asia somewhere. Maybe they bought a resort for themselves.

Authorities seem to eager to accept a small offering to end it........so the scammers can live in peace and happiness after the wife pays up the small amount and disappears.


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## james4beach (Nov 15, 2012)

I think it's a scam too, and I still think criminal charges are coming.


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## sags (May 15, 2010)

Bitcoin also fell from $10,000 to $8,000 per unit.

It is going nowhere at the speed of light.


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## sags (May 15, 2010)

I am a little baffled as to why the authorities can't track the money from Quadriga wallets to other wallets.

The notion of total secrecy in bitcoin is bogus, unless the person never spends the money or never moves it to an exchange that employs a KYC (know your customer) rules.

Many bitcoiners intently watch the wallets containing the first bitcoin transactions to see if Satoshi Nakamoto moves the money. They could then follow the money.

The wallet may be anonymous, but the time/date stamp on the transaction will trace back to the order that was implemented at that exact time and date at that exchange.

Who is going to steal $260 million and never spend it ?

For $260 million, one would think the RCMP would employ an international team to track the money down. They simply don't have the expertise to do the job.

I suggest they go on Reddit and recruit some of the best hackers on that site to focus all their time and expertise to tracking down the money.


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## james4beach (Nov 15, 2012)

sags, we did a bit of this work at my computer security firm. What happens is that the trail runs cold.

The bitcoin ledger _does_ show each transfer, from one wallet to another. In the Quadriga case one could clearly see the transfers out of Quadriga and into accounts at other major exchanges.

Ernst & Young reported on how the Quadriga CEO transferred the money out, to use for his own lifestyle.

However, the problem becomes what happens after that point. Crypto currencies are a dream for money laundering. You can generate a brand new wallet, and then transfer money from one to another. The money does not sit in one place... it is constantly transferred. For example, if a criminal receives dirty the money, they will hop it from one wallet to another.

The criminal networks in bitcoin and ethereum even have tools for this, called "mixers". The mixers are automated money laundering systems. Another big source of laundering are gambling web sites, which presumably involves games of chance but which are also used to distribute funds among people for the purpose of concealing money trails.

Law enforcement (who I've worked with on this topic) has been developing tools to trace these transfers, trying to link them up with other information to figure out where the money goes. But the trails can run cold awfully fast, if someone has been diligent about transferring the coins around.


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## sags (May 15, 2010)

It sounds like good reasons to ban crypto-currencies.

From what I have seen their primary purpose is to hide criminal activity, terrorist operations and aid fraudulent activities.

Just what we need.


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## james4beach (Nov 15, 2012)

I don't know sags. There are lots of excellent uses as well, but there definitely needs to be more regulatory control. I would argue for regulation, not banning.

The first thing we'll have to see is how many users remain after regulations go into force.


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## stantistic (Sep 19, 2015)

*Quadriga - good summary article*

​https://www.theglobeandmail.com/bus...hady-ventures-in-gerald-cottens-youth-led-to/


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## sags (May 15, 2010)

The sad part is that bitcoin and the other fake crytocurrencies will be around as long as people are gullible enough to trade their real money for them.


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## james4beach (Nov 15, 2012)

stantistic said:


> ​https://www.theglobeandmail.com/bus...hady-ventures-in-gerald-cottens-youth-led-to/


Wow! This is really interesting info.



> He soon became enthralled with the bustling site, known as TalkGold, where fly-by-night promoters and gullible investors could connect. Mr. Cotten made nearly 2,000 posts over the next decade. Hidden behind fake names and software to obscure his location, he experimented with shady ventures of his own and pushed them on the forum.
> 
> Mr. Cotten’s early online activities, which are previously unreported, proved to be an education of sorts. He apparently launched several schemes – and occasionally ran into trouble. “I sincerely ask that everyone remain calm,” reads a post from his sceptre account in 2004, when he was just 15, in what looks like a scramble to return money to at least 235 investors.
> . . .
> ...


Dead or not, looks like he was an established con artist. He started pretty young. Maybe if he didn't engage in so much shady activities, he might have survived longer? Crohn's disease is made worse by heavy stress. I would imagine he might have felt some stress from constantly conning people and stealing their money.

Bitcoin and crypto currencies certainly seem to attract these kinds of people. But you also have to think: how many other people we do business with, or who are currently in executive positions at companies, have beginning similar to Cotton ... trying to run scams since they were kids?


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## james4beach (Nov 15, 2012)

Also, I call dibs on identifying Quadriga as a scam/con back in January 2019, long before the auditors figured out the CEO was stealing all the money. Post #5

As I wrote back then (and wrote in 2018 in another thread) through my own investigation, I had found that Quadriga had virtually no Canadian presence and was operating their infrastructure out of the Bahamas. Cotten himself was spending a lot of time there, which I found traces of in meeting schedules & agendas posted online.

I found the Bahamas link a year earlier in 2018:
https://www.canadianmoneyforum.com/showthread.php/106425-Bitcoin?p=1828362&viewfull=1#post1828362


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## hboy54 (Sep 16, 2016)

james4beach said:


> Also, I call dibs on identifying Quadriga as a scam/con back in January 2019


Well congrats. You were also all over HCG two years ago too. How did those thoughts and predictions work out for you? Instead of making predictions such that I could come back two years later to joyfully claim "told you so" I basically said "I'm in at $7" and then shut my mouth.


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## undersc0re (Oct 7, 2017)

It was a tossup couple years ago for me, either Quadriga or coinsquare...after a few months of researching online and getting multiple private msgs telling me to stay far away from quadriga when inquiring about it....I went with coinsquare. It turned out to be great to deal with! Thankgawd I never went with the ripoff! Quadriga did seem shady as I started asking them questions and emailed in my i.d. to confirm identity..took 7 weeks to confirm lol....then I never visited the site again.

So much money just swindled away with ease and spent carelessly....can you claim it as a loss on your taxes at least lol.


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## james4beach (Nov 15, 2012)

I still have my doubts about whether Cotten is really dead. This guy is a life long con artist since age 15.

He was supposedly opening an orphanage in India. Really? Charity work in a third world country? That's awfully generous and altruistic for a man who's dedicated his life to ripping off people.


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## Topo (Aug 31, 2019)

james4beach said:


> I still have my doubts about whether Cotten is really dead. This guy is a life long con artist since age 15.
> 
> He was supposedly opening an orphanage in India. Really? Charity work in a third world country? That's awfully generous and altruistic for a man who's dedicated his life to ripping off people.


That has been my impression as well. He is okay enough to go overseas, then has Crohn's disease flare up or complications, dies in a private clinic, the doctor there says he died, no other confirmation of identity, no autopsy there or here, his funeral is closed-casket .... 

I think the first thing the authorities ought to do is see who is in the casket.


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## james4beach (Nov 15, 2012)

Very few people die of Crohn's disease. Especially not someone as wealthy as him: just needs some good quality care, and it should be exeedingly rare to have a complication so serious that it causes death.

He also filed his will 12 days before death: https://www.bnnbloomberg.ca/crypto-...iled-last-will-12-days-before-death-1.1209553

The FBI is looking into it. They will be more aggressive than Canadian authorities.


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## Topo (Aug 31, 2019)

Looks like it is playing out like a movie...


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## sags (May 15, 2010)

I remember when BreX collapsed. A lot of people at work who never invested in anything before were investing everything they had and borrowing more to buy the shares.

After it collapsed, I was with some buddies in Grand Cayman Island. We had rented a jeep and were scooting around looking at the gated mansions on the ocean.

We pulled the jeep into the upscale marina and country club and there was geologist John Felderof walking along. We passed right by him and I knew who he was.

All the people who bought shares in BreX got slaughtered. Many people at work lost everything and owed a lot of money. 

One guy had saved and invested since he was 18 years old and lost it all.....over a hundred thousand dollars. Another guy had borrowed $50,000 from his mother.

And there was Felderhof, who was the geologist claiming they found a massive gold strike when in fact he had peppered the core samples........living the good life.

I suspect Cotton and his pal are living the good life as well. His "partner" was convicted in the US of identity theft, so they are probably living under assumed names somewhere.

It appears that John Felderhof came back to Canada after a time among the wealthy in the Cayman Islands and was acquitted of all charges. Some crimes do pay well.

https://www.theglobeandmail.com/rep...he-bre-x-case-finally-closes/article18124172/


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## sags (May 15, 2010)

Bitcoin is a capable criminal's nirvana. The anonymity, lack of understanding by law enforcement, and complexity of trying to follow the money makes it easy for criminals.

Despite hundreds of millions (perhaps billions) of dollars gone missing, nobody has ever been convicted of the thefts or the trading fraud on the exchanges. 

The only major conviction was to Ross Ulbricht who operated the illegal dark Silk Road website selling drugs, guns and murder using bitcoins as the currency.

He was sentenced to a double life plus 40 years in prison without parole for a litany of charges including paying for a murder he believed had taken place at his direction.

The "hit man" was in fact an FBI agent. They nabbed him at the San Francisco Public Library with his laptop open and logged in. Bye.......Ross.

https://en.wikipedia.org/wiki/Ross_Ulbricht


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## MrMatt (Dec 21, 2011)

sags said:


> Bitcoin is a capable criminal's nirvana. The anonymity, lack of understanding by law enforcement, and complexity of trying to follow the money makes it easy for criminals.
> 
> Despite hundreds of millions (perhaps billions) of dollars gone missing, nobody has ever been convicted of the thefts or the trading fraud on the exchanges.
> 
> ...


Where are you getting your information on Bitcoin.

Bitcoin is completely public with no anonymity.
Every single transaction is permanently published to the world.
For example this morning at 5:20 the following transactions happened.
https://www.blockchain.com/btc/bloc...45b45d0ac4c5fff2f97e7b7ec3b0324ce3b1c092442bc

It's law enforcements dream currency. Just link the account number to the person of interest and you know where all their money came from and went to.

This is specifically the big risk with bitcoin right now.

There is a legitimate argument that if you have bitcoins in your possession from a blacklisted entity (Sanctioned government or group), you have a problem.
https://www.coindesk.com/goodbye-fungibility-ofacs-bitcoin-blacklist-remake-crypto


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## sags (May 15, 2010)

The blockchain doesn't tell you who is making the transactions or where the money is coming from or going to. It only records the transaction was made.

Bitcoin "wash" sites accept coins from thousands of owners and combine them together, so nobody can follow the history of the coins.

Terrorists, criminals, and offshore gambling sites are the main users of bitcoins as a currency, as demonstrated by the Silk Road website.

If it was easy to find the money, people wouldn't have been scammed for hundreds of millions of dollars that have disappeared into thin air.

Where is the money from Quadriga and all the other scams ?


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## MrMatt (Dec 21, 2011)

sags said:


> The blockchain doesn't tell you who is making the transactions or where the money is coming from or going to. It only records the transaction was made.
> 
> Bitcoin "wash" sites accept coins from thousands of owners and combine them together, so nobody can follow the history of the coins.
> 
> ...


Actually bitcoin is a fully public blockchain, and it tells you exactly where the money is coming from and going to.
I even posted a link to a blockchain visualization site, it showed what account transferred to the other account.

The mixers are being raided by authorities, or since you have coins tracable to a criminal act, they become tainted, like I said that is a problem.
They explained this pretty clearly in the coindesk article I linked to.


Please show me a single bitcoin that disappeared "into thin air". That simply doesn't happen, everyone can see exactly which account holds which coins.

Quadriga and the other scams? They stole it, they took the money, and ran away. 
When people thought they "bought bitcoin", they didn't, they bought a website that said they had a balance of bitcoin in their account. But in actuality they never had more than a fraction of the bitcoins they claim they did. Just like any other ponzi scheme, it has almost nothing to do with bitcooin.


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## nobleea (Oct 11, 2013)

This was a far bigger, and more blatant scam.
They don't know how much was taken, anywhere from 4B-15B.
Interesting story. Really sleazy.

https://www.bbc.com/news/stories-50435014?utm_source=pocket-newtab


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## sags (May 15, 2010)

Interesting investigation and the one prevalent factor in these crypto scams is the same one.........over and over and over.

There is precious little thought by "investors" that the crypto has no value unless it is accepted as payment by other people who trust it.

The "investors" are totally focused on greed and easy money. Get into the scheme early, watch it rise in value and then cash out very wealthy.

Greed is what drives all scams. Sometimes the greed is blatant, and sometimes it is all dressed up disguised as a tax rebate scam that donates medicine to the poor.


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## sags (May 15, 2010)

As to the blockchain, it has been shown over time to have weaknesses.

As the number of transactions recorded continued to expand, the time delay for approvals continued to lengthen.

It caused a "double spending" problem where people would spend in one store and then immediately spend the same bitcoins in another before the original transaction was recorded.

The big debate was on "forking" the blockmain into several parts, which would itself defeat the concept of a complete historical record on one blockchain channel. 

In any event, given the millions of transactions per second that occur in the real world, the blockchain is incredibly slow and not useful to financial institutions for real time transactions.


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## nobleea (Oct 11, 2013)

Another article on Quadriga. Provides 3 theories for Cotten. Gerry The Mastermind, Gerry The Royal Fuckup, etc. Who knows which one is true.
https://www.vanityfair.com/news/201...adriga-gerald-cotten?utm_source=pocket-newtab


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## MrMatt (Dec 21, 2011)

sags said:


> As to the blockchain, it has been shown over time to have weaknesses.
> 
> As the number of transactions recorded continued to expand, the time delay for approvals continued to lengthen.
> 
> ...


All the major cryptocurrencies have target blocktimes, and most transactions are confirmed in a few minutes.

You want your transaction faster, pay to prioritize it.
The only "double spend" problem is if you acknowledge the payment before it is confirmed.

Wait until you actually HAVE the funds, just like you wait for a check to clear.
These rules aren't any different than cash.


Forking is a non issue. I don't see how it is a problem.
If bitcoin was to fork into Bobs Bitcoin & Freds Bitcoin, you'd have coins on both chains, and people could decide which ones they'll accept. It isn't like you have to choose one or the other.
If someone makes a dumb fork, nobody will follow it.

These are really non issues, and they've already been discussed at length.

If you don't like it don't play.


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## m3s (Apr 3, 2010)

MrMatt said:


> When people thought they "bought bitcoin", they didn't, they bought a website that said they had a balance of bitcoin in their account. But in actuality they never had more than a fraction of the bitcoins they claim they did. Just like any other ponzi scheme, it has almost nothing to do with bitcooin.


Exactly it's the exchange not the underlying currency. Crytpo 101 is don't leave large quantities of digital currency on an exchange account

What do you think about ethereum and others? Personally I'm not interested in bitcoin but most here still think bitcoin is the only digital currency


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## MrMatt (Dec 21, 2011)

m3s said:


> Exactly it's the exchange not the underlying currency. Crytpo 101 is don't leave large quantities of digital currency on an exchange account
> 
> What do you think about ethereum and others? Personally I'm not interested in bitcoin but most here still think bitcoin is the only digital currency


Ethereum is interesting, but it isn't scaling.
https://beincrypto.com/ethereum-founders-admit-never-designed-scalability/

I do think the idea of smart contracts is interesting, but I don't see how they'll work in practice.
Lets say we have a crypto contract, what happens when we one party says the agreed act took place, and another says it didn't. You still need some sort of trusted third party to make the determination. 
Then it's a simple escrow service.

Bitcoin gets all the attention, but I think the interesting stuff is in other coins.

Zcash & Monero are very interesting as they're an actual fungible currency. ie they can't be tracked.
I also think Monero and it's plan to be ASIC resistant is interesting.

Iota has a lot of neat ideas, but I don't think it has traction.

Overall I think the future should be a private blockchain, but I can't imagine the authorities will be okay with that. They really really don't like having a money supply they can't monitor and track.
Think of how much they have fought widespread crypto, and the current talk about encrypted DNS.

They really don't want people to move money secretly and freely. Why do you think they have declaration rules with how much cash you can carry into a country.


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## Topo (Aug 31, 2019)

Regarding the Cotten mystery, I think the key lies with his wife. If he is still alive enjoying the proceeds of his scheme somewhere nice, she most likely knows about it. If Cotten is dead, given the ambiguous nature of his death, it is possible someone took care of him. His wife possibly has some clues.


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## james4beach (Nov 15, 2012)

I predict that (a) there will be a movie, and (b) she ends up in prison

I hesitated writing that because I don't want to be insensitive if she really did lose her husband


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## sags (May 15, 2010)

I don't know that any law enforcement force cares enough about this scam to devote a lot of time and money towards it. 

White collar crime is the easiest to get away with it. Low level criminals get caught and punished.

High level criminals become respected wealthy people and Presidents of the United States.


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## Topo (Aug 31, 2019)

Looks like there is a request out there to exhume him.

https://ca.yahoo.com/finance/news/l...o-ask-to-dig-up-dead-ceos-body-193417663.html



> In a letter to the RCMP, law firm Miller Thomson asked to have the body exhumed because of it’s clients’ large financial losses and uncertainty around Cotten’s death which “in our view, further highlight the need for certainty around the question to whether Mr. Cotten is in fact deceased.”


A first step.


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## james4beach (Nov 15, 2012)

Topo said:


> A first step.


Yes, this is probably worth doing.



sags said:


> I don't know that any law enforcement force cares enough about this scam to devote a lot of time and money towards it.
> 
> White collar crime is the easiest to get away with it. Low level criminals get caught and punished.
> 
> High level criminals become respected wealthy people and Presidents of the United States.


Yes exactly. Trump is a professional crook and con man with a long history of scams and shady business deals.

And many Americans think highly of him.


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## marina628 (Dec 14, 2010)

I read somewhere that he was cremated ,can they get DNA from cremated remains?


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## nobleea (Oct 11, 2013)

marina628 said:


> I read somewhere that he was cremated ,can they get DNA from cremated remains?


He wasn't cremated. But is was a closed casket funeral.


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## james4beach (Nov 15, 2012)

The OSC published its findings on QuadrigaCX



> The findings show that Cotten essentially operated a Ponzi scheme. He opened accounts under aliases and credited himself with fictitious currency and crypto asset balances, which he traded with unsuspecting Quadriga clients, according to the OSC. Cotten sustained real losses when the price of crypto assets changed, thereby creating a shortfall in assets available to satisfy client withdrawals. He covered this shortfall with other clients’ deposits. OSC staff calculated that the bulk of the C$169 million in client losses – approximately C$115 million – arose from Cotten’s fraudulent trading.
> 
> Staff also determined that Cotten misappropriated millions in client assets to fund his lavish lifestyle.


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## AltaRed (Jun 8, 2009)

The price of shady, unregulated, poorly supervised businesses..... There seems to be one of these every few years. Money is the root of many evils.


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## james4beach (Nov 15, 2012)

AltaRed said:


> The price of shady, unregulated, poorly supervised businesses..... There seems to be one of these every few years. Money is the root of many evils.


This is a big reason I am happy with the big bank brokerages and the boring investments I hold within them... any of the big 5's brokerages have tons of regulation and checks and balances.

Am I missing out on some amazing other opportunities? Maybe, but I'll let others explore those and have fun with them.


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## AlexRoss0908 (Aug 21, 2020)

The problem with cryptocurrencies and smart-contracts is that they are not bounded to any country. Which country's laws must be applied in case of fraud and scam? It is clearly stated that cryptocurrencies, such as bitcoins, are not attached to any country or bank. Transactions are not made via banks, just person to person. Banks are under control and follow regulations, but in the case of cryptocurrency, there are practically no rules. Obviously, a lot of scam schemes will take place. Actually, online things make life easier. But sometimes you wish that it was not online. Now, I need to get a refund from steam for online made purchase, I really hope that those tips will help me How to Request and Get a Refund on Steam | Step-By-Step Guide - InvestoTrend. Now, I’m in that situation when I wish I could speak to the real person.


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## MrMatt (Dec 21, 2011)

AlexRoss0908 said:


> The problem with cryptocurrencies and smart-contracts is that they are not bounded to any country. Which country's laws must be applied in case of fraud and scam?


The country in which the action took place typically has jurisdiction.

Lets say you hire me to write you an article, which laws apply?
That depends on the country, and in some cases the state. For example that would likely be a valid contract in most places, but might be illegal under California labour laws.


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