A major Canadian cryptographic site, Quadriga CX, has collapsed as a result of a Ponzi scheme set up by its late boss, costing its customers millions of dollars, Canadian authorities have concluded.
In February 2019, Vancouver-based Quadriga CX had filed for bankruptcy protection after the sudden death of its CEO, Gerald Cotten, who had made millions of dollars in cryptomoney inaccessible.
His widow, Jennifer Robertson, claimed that he was the only one who knew the codes to access them, preventing customers from getting their money back.
« Quadriga collapsed because of a fraud committed by Cotten, » the Ontario Securities Commission said in a news release Thursday, pointing to a « Ponzi scheme » set up by the company’s late CEO.
Under the classic Ponzi scheme, the first subscribers are paid from the money of new investors until the scheme is exhausted.
« The collapse of Quadriga in 2019 resulted in massive losses for 76,000 customers in Canada and around the world, who lost at least C$169 million in total, » said the Ontario Securities Commission.
The industry regulator released the findings of a 10-month investigation Thursday.
« Most of the $169 million in losses to customers, about $115 million, was the result of Mr. Cotten’s fraudulent business, » investigators said, adding that millions of dollars were being used to « finance his luxurious lifestyle.
Former CEO Gerald Cotten, 30, died from complications of Crohn’s disease during a humanitarian trip to India on December 9, 2018.
The company, touted as Canada’s leading cryptocurrency platform, allowed the exchange of bitcoin, litecoin and etherum.