Regulators: Deceased Quadriga Founder Committed Fraud

Published at: June 11, 2020

The Ontario Securities Commission, or OSC, claims that the crypto exchange Quadriga collapsed in 2018 because of fraud committed by its late founder, Gerald Cotten, who passed away on his honeymoon in India.

The report released on June 11, revealed by CBC Canada, says Cotten opened several accounts under aliases and credited himself with “fictitious currency,”. He traded this currency with unsuspecting clients of his Vancouver-based crypto exchange.

The deceased Quadriga founder was unable to meet his client’s withdrawal requests when the price of crypto assets fell. He then created a Ponzi scheme, covering the demand using funds from other Quadriga clients.

As detailed by the OSC, the organization attributed about $115 million of the $169 million clients lost to Cotten’s fraudulent trading, which helped him finance his millionaire lifestyle.

Due to Cotten’s death, the OSC says it will not seek to bring legal action against Quadriga, as “it’s not practical.”

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