Jesse Powell, the CEO of Kraken, says that the FBI and RCMP have been in contact about the ongoing QuadrigaCX fiasco.

A new day brings a slew of new developments in the ongoing saga of QuadrigaCX. The Canadian exchange has been in the hot seat ever since its CEO, Gerald Cotten, died in India due to complications from Crohn’s disease last December. Cotten was, apparently, the only one who knew the private keys for the exchange’s cold wallets. His death meant that the funds (estimated around $140 million) belonging to over 115,000 users are locked away, out of touch, as the only known record of the keys are located on his encrypted laptop. Now it appears that law enforcement in both the USA and Canada are expressing interest in finding out what exactly is going on.

Will Federal Law Enforcement Probe QuadrigaCX?

The CEO of Kraken, Jesse Powell, says that both the FBI and Royal Canadian Mounted Police (RCMP) have contacted Kraken about QuadrigaCX. Powell says that the agencies did not talk to him directly but instead communicated with Kraken’s compliance team. So far, both agencies have neither confirmed or denied any investigation.

Powell believes that the cryptocurrencies supposedly locked away in cold storage wallets were never moved there at all. He maintains that looking at blockchain transactions shows that they were moved to hot wallets on other exchanges. This appears to be the case to some regard as Ernst & Young, the court-appointed monitor, found that the exchange’s cold storage wallets are empty. Plus, new reports say that over $100 million in Ethereum (649,708 ETH) have been found on other exchanges. Kraken is currently offering a $100,000 reward to the most helpful tip in recovering the lost assets.

Other Developments

In other QuadrigaCX news, the widow of Gerald Cotten, Jennifer Robertson, has filed a request to be repaid $225,000. Robertson paid this amount to provide “interim financing” while the situation is figured out. Needless to say, this request has gone over like a lead balloon from the over 115,000 users who have not been able to access their funds.

Gavin D. F. MacDonald, a partner with Cox & Palmer, the law firm representing the users, says:

We are concerned about the repayment by the applicants of C$300,000 to Ms. Robertson in the first week of March contemplated by the filed cash flow projection. The repayment contemplated by the cash flow is inappropriate until such time as the monitor has reviewed the requested information and satisfied itself as to the source of funds used to fund the CCAA proceeding.

The court has approved of Ernst & Young appointing a Chief Restructuring Officer that would be in charge of the exchange and associated companies while they are still looking for the missing cryptocurrency. The court has also extended its protection against class action lawsuits for another 45 days.

Overall, this entire situation has more layers than an onion. There has been speculation that Cotten faked his death and that this entire fiasco is just one big scam. Then there’s the report that the co-founder of the exchange, Michael Patryn, is actually a convicted felon who is now using an alias. Just when you think the QuadrigaCX saga couldn’t get any weirder, another twist pops up.

What’s your take on this entire fiasco? Let us know in the comments below.

Images courtesy of Wikimedia Commons/FBI and Pixabay.