• Mon, 26 Aug 2019, 09:53 AM
  • All times are UTC
  • Edition:
    International
Copy link
Increase text size
Decrease text size
Link copied

QuadrigaCX co-founder Gerald Cotten used user cryptocurrency for own trading: EY Report

Thu, 20 Jun 2019, 09:41 am UTC

New shocking details related to the now-defunct cryptocurrency exchange QuadrigaCX have come to light as court monitor EY filed its fifth report.

The report was filed on June 19 with the Supreme Court of Nova Scotia, Cointelegraph reported. In it, EY has underscored its concerns over “significantly flawed” operating infrastructure of the exchange, saying:

“Quadriga’s operating infrastructure appears to have been significantly flawed from a financial reporting and operational control perspective. Activities were largely directed by a single individual, Mr.[Gerald] Cotten and as a result, typical segregation of duties and basic internal controls did not appear to exist.”

EY went on to state that it could not find any accounting records and believe that there was no segregation of assets between Quadriga funds and user funds. It further pointed out that the funds held by the exchange on behalf of its customers may have been used for purposes other than to fund user withdrawals.

The report further reveals that Quadriga not only maintained user cryptocurrency in hot and cold wallets but also transferred it to other exchanges and engaged in trading activities.

“It appears that User Cryptocurrency was traded on these exchanges and in some circumstances used as security for a margin trading account established by Mr. Cotten. Trading losses incurred and incremental fees charged by exchanges appear to have adversely affected Quadriga’s Cryptocurrency reserves,” the report said.

EY also said that it was unable to confirm the identity of wallet holders to which “substantial amounts of Cryptocurrency were transferred.”

Cotten is also said to have created accounts under aliases allegedly “Unsupported Deposits were deposited and used to trade within the Platform resulting in inflated revenue figures, artificial trades with Users and ultimately the withdrawal of Cryptocurrency deposited by Users.”

QuadrigaCX ran into problems after its founder Gerald Cotten passed away in December and with this, it lost access to millions of dollars worth of customer funds. At the filing date, around 76,000 users were owed a combination of fiat and cryptocurrency by Quadriga, valuing at a total of C$214.6 million.

<Copyright © TokenPost. All Rights Reserved. >

To leave a comment, please sign in.
More
  • Bitcoin (BTC) $10,363.50 (+2.19%)
  • Ethereum (ETH) $190.43 (-0.16%)
  • XRP (XRP) $0.271200 (-0.53%)
  • Bitcoin Cash (BCH) $312.10 (+1.09%)
  • Litecoin (LTC) $74.15 (+0.56%)
  • Bitcoin (BTC) $10,363.50 (+2.19%)
Aug 26, 2019 (Monday)
09:37
FDA mulls using blockchain to modernize medical feedback and recall process
09:33
Manchester City announces blockchain partnership with Superbloke
08:49
US lawmaker’s concerns on Facebook's crypto remain unresolved even after meeting with Swiss regulators
08:13
Brave Browser expands token tipping service to Vimeo, Reddit users
08:05
Craig Wright again tries to prove authorship of Bitcoin white paper
04:09
Crypto startup Circle eyes $100M fundraise for its crowdfunding arm SeedInvest
04:05
BitPay, Blockchain.com team up to offer a new way of bitcoin spending
04:04
Binance offers lifetime VIP membership to hack victims, blames KYC vendor for image leaks
Aug 23, 2019 (Friday)
11:35
Stablecoin project Terra receives funding from HashKey Capital
10:49
Three of the founding members of Libra Association consider backing out: Report
08:55
Overstock's Patrick Byrne steps down as CEO
08:52
Pundi X brings XPOS crypto payments to Venezuela's Traki retail stores
07:22
Blockchain startup Blockstack scores strategic investment from Japan's Recruit Holdings
07:19
BitGo announces support for multi-signature EOS wallet and custody services
06:39
US Treasury blacklists crypto addresses of suspected Chinese fentanyl traffickers
06:14
Chainalysis launches ‘Chainalysis KYT Alerts’ to detect suspicious cryptocurrency activity in real-time
05:13
Cryptocurrencies used to buy fentanyl, other illicit drugs: White House
05:04
Blockchain energy startup Power Ledger extends energy trading trial in Fremantle
03:53
Blockchain accelerator initiatives launched at the University of California campuses
Aug 22, 2019 (Thursday)
13:05
Crypto exchange Coincheck mulls launching IEO Platform
Subscribe to the TokenPost newsletter!
Don't show me this again today.
Back to top
Copyright ⓒ TokenPost. All Rights Reserved.
PUBLISHsoft