Canadian cryptocurrency firm collapsed due to Ponzi scheme by late-founder: Regulator

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Canadian cryptocurrency firm collapsed due to Ponzi scheme by late-founder: Regulator

Late on Thursday, Canada’s biggest securities regulator had affirmed that the last year’s ruin of a crypto trading platform Quadriga CX had been related to a Ponzi scheme developed by the late-founder Gerald Cotten, who died in India on December 2018 from complications of Crohn’s Disease, though Cotton’s family and the firm had concealed the news for weeks.

Later in the January of 2019, Quadriga CX Facebook page had revealed the news of death of its founder claiming that Cotten was died in India at the age of 30 during volunteering for an orphanage.

However, branding the Quadriga founder Cotten as an old-fashioned fraud wrapped up in modern technology, a staff at the Ontario Securities Commission (OSC) wrote in a case report, “While public release of an investigative report is rare, we believe the tens of thousands of Ontarians who entrusted Quadriga with their money and crypto assets deserve to know what happened”.

Canadian Securities Commission confirms Quadriga Ponzi scheme

In point of fact, as Ontario Securities Commission had unveiled the Ponzi scheme of the Quadriga founder, the OSC report had also added that Cotten, died at the age of 30, used to cover up the firm’s losses with younger clients’ deposits, though Richard Niedermeyer, the lawyer for Cotten’s widow, Jennifer Robertson, had declined to comment over the issue while being asked.

Aside from that, a staff who worked on the OSC (Ontario Securities Commission) report was quoted saying that more than 76,000 investors in Canada and around the globe had been impacted from the collapse of Quadriga in 2019, while the investors had collectively lost $124.2 million (C$169 million).

However, more than two-third or C$115 million of the losses had been occurred due to Cotten’s fraudulent acts, the OSC regulator said. Concomitantly, the OSC report published on Thursday, had also added that the Quadriga founder, Cotten, used to embezzle company funds for personal uses and between the May of 2016 and the January of 2018, Cotton alongside his wife had siphoned off about C$24 million or nearly 10 per cent of what Quadriga owed to its clients during Cotten’s death.