OSC: QuadrigaCX Crash Was Result of Fraud
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The Canadian watchdog regulator, the Ontario Securities Commission (OSC), says the collapse of QuadrigaCX cryptocurrency exchange was the outcome of fraud by its founder Gerry Cotten, who suddenly died in India on December 9, 2018, Bloomberg reports.

Cotten's death resulted in $125 million in losses for 76,000 investors in Canada and abroad as the QuadrigaCX's founder was the only one who had private keys for lost cryptocurrencies.

The OSC Director of the Enforcement Branch Jeff Kehoe says while public release of an investigative report is rare, the OSC believes the tens of thousands of Ontarians who entrusted the exchange with their funds have right to know the truth.

"Our aim in making this information public is also to prevent this type of situation from recurring," Kehoe added.

In February 2019, the Ontario’s regulator began reviewing the matter, given that 40% of investors in the platform were from Ontario.

For almost a year, the regulator analyzed trading and blockchain data, interviewed key witnesses, and collaborated with numerous regulatory bodies in Canada and abroad.

The regulator concluded that Cotten operated a Ponzi scheme. The investigation says Cotten opened accounts under aliases and credited himself with fictitious currency and crypto balances, which he traded with other Quadriga clients.

Creditors of Hacked QuadrigaCX Ask Police to Confirm the Exchange CEO's Death

When Cotten sustained losses due to the drop of crypto prices, he covered loses with other clients’ deposits. OSC staff calculated that the bulk of the $169 million in client losses – approximately $115 million – arose from Cotten’s fraudulent trading.

In March, Ernst & Young, the company in charge of dealing with the creditors of the now defunct Canadian crypto exchange QuadrigaCX, received a request from the Canadian Revenue Authority (CRA) for information on its users.

Court documents filed with the Ontario Superior Court of Justice on March 24 detail the claim, which covers 750,000 documents on the exchange's 115,000 users.

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