Uncovering the Story of QuadrigaCX
One of the ways that people are exposed to the world of cryptocurrency is through stories like QuadrigaCX. For those who are unfamiliar with the tale, it goes like this. QuadrigaCX was a popular Canadian cryptocurrency exchange that was in business between 2014, and 2018. Everything suddenly stopped when the founder and CEO, Gerald Cotten died suddenly on a trip to India. The catch was that he died with the keys to the cryptocurrency wallet that held more than $190 million dollars of Canadian Investors money. If this story sounds a little far fetched, its because it is. There are many details to this story that have led journalists and investigators to concoct a number of scenarios. As far as we can tell, this story is far from over. Join Keegan and Mrugakshee as they uncover the story of QuadrigaCX.
Cryptocurrency Key Management
When I (Keegan) started hearing and reading about this story, I noticed a couple of extremely odd details that simply did not add up. One of the things we teach at Go Full Crypto is responsible key management. After all, if you die with the only keys to your cryptocurrency wallet, there is no way to recover the funds and pass them on to your successors. It is extremely irresponsible for holders of cryptocurrency to not incorporate key management into their Crypto Strategy.
Therefore, the first thing that didn’t add up about this story was that the founder of a cryptocurrency exchange wasn’t following well known best practices. It is one thing to not back up your wallet with $50 in it. It’s a whole other thing to not back up a wallet with $190 million of other peoples funds. For me, this was simply not possible, and completely out of the realm of possibility in terms of truthfulness.
Reddit to the Rescue
Some of the customers of QuadrigaCX took it upon themselves to investigate the truthfulness of the claims being made by the company after the death of their leader. The FBI and RCMP (Royal Canadian Mounted Police) were not properly equipped with the tools and knowledge required to adequately conduct the investigation. The enraged customers congregated around the internet, one of those places being reddit. These crypto savvy users were watching the addresses that belonged to Quadriga when they noticed something peculiar. Some Litecoin had been moved out of one of Quadriga’s wallets that they were claiming to be lost. Needless to say that if the money moved, then the keys in fact were not lost. It is impossible to move funds on the blockchain without owning the private keys associated with the funds that moved.
Much of the material used later in courts to tell the story of Quadriga was compiled by anonymous individuals on messaging boards such as Telegram and Reddit. The picture of what happened with Quadriga would not be as clear as it is today without the help of hundreds of these individuals donating their time to getting to the bottom of the story.
What Can We Learn
We can all take a note from this story and back up our wallets. Regardless of what actually happened, we all want to avoid losing access to our cryptocurrency. In the event of our untimely death, we want to make sure that our loved ones, or our business successors have access to the cryptocurrency in our wallets. One question that Mrugakshee and I like to ask ourselves is “was this preventable?”.
It turns out the answer to that question is yes. A lot of fishy behaviour was going on at QuadrigaCX long before the death of Gerald Cotten. In the event that blockchain forensics tools were watching the associated QuadrigaCX wallets, it would have been possible to detect that the exchange was misappropriating the funds of their users. In other words, if law enforcement knew what to look for, and how to look for it, they could have put a stop to the operations of the business far ahead of the inevitable crash of QuadrigaCX.
Listen to the Episode
More on QuadrigaCX
If you are interested in reading a very well put together and near complete report of everything that happened with the QuadrigaCX story, we recommend an article produced by Vanity Fair. It was put together by a journalist named Nathaniel Rich, and is a great account of the many details that make up the complexities of this story.
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