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Deceased Fall River man’s cryptocurrency company QuadrigaCX may have directed client funds to personal accounts


After Gerald Cotten died, his company, QuadrigaCX, entered bankruptcy proceedings. Those proceedings have “identified several instances in which funds may have been used inappropriately.” - Facebook
After Gerald Cotten died, his company, QuadrigaCX, entered bankruptcy proceedings. Those proceedings have “identified several instances in which funds may have been used inappropriately.” - Facebook

The accounting firm handling the bankruptcy case of QuadrigaCX says it has identified several instances in which funds may have been used improperly.

QuadrigaCX was a Vancouver-based cryptocurrency exchange company that was owned by deceased Fall River resident Gerald Cotten.

Quadriga shut down on Jan. 28 after the announcement that the 30-year-old Cotten, its only director, had died suddenly in India. The company owes more than 110,000 customers more than $250 million in cash and digital currency, and was moved into bankruptcy in April.

Ernst & Young submitted its fifth report to the Nova Scotia Supreme Court this week. In it, it said the general framework of the Quadriga business was to offer a platform where users could facilitate money and cryptocurrency trades with funding they provided.

Ernst & Young said in the report that it appears Cotten directed how funds were used and that it had “identified several instances in which funds may have been used inappropriately.”

Those eight instances included using customer funds to pay Quadriga operating costs without tracking and whether sufficient fee revenue had been earned. It also found that customer funds were used as security for outside margin accounts; use of third-party external exchanges to hold user cryptocurrency; and, transferring Quadriga funds to personal accounts or to fund personal assets.

The monitor’s report said there was no indication that customers were aware that the funds were being used in that way.

Cotten operated the company from his laptop and was the only person with the pass codes needed to get at $190 million in cryptocurrency that was locked in off-line digital wallets.

Quadriga has been embroiled in controversy as details have slowly emerged, including that digital storage accounts used to hold Bitcoin for clients were empty for months prior to Cotten’s death.

Earlier this year the court put a freeze on assets held by Cotten’s estate, assets held by his widow Jennifer Robertson, Seaglass Trust, Robertson Nova Consulting Inc., and Robertson Nova Property Management Inc.

The court order does allow Cotten’s widow to cover her legal and living expenses through access to two bank accounts with oversight from Ernst & Young.

This week’s report said that Robertson has been cooperating with the monitor to identify, preserve and sometimes sell the assets the proceeds of which are being held in trust.

The previous estimated value of the preserved assets was about $12 million, including 16 properties in Nova Scotia, property in British Columbia, investments, cash holdings, a sail boat, an aircraft, luxury vehicles, and gold and silver coins.

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