UPDATE (December 16, 2019): This story has been updated to include latest developments of the QuadrigaCX story including the request for exhumation of the CEO.

It was not your average exchange hack. This is a tale of changing identities, a marriage, a last-minute will and the strange death of a person solely responsible for $190 million in assets. This is the story of QuadrigaCX, Canada’s largest crypto exchange.

On January 14, Gerald Cotten, the 30-year-old co-founder and CEO of Canadian exchange, QuadrigaCX, died suddenly, on honeymoon in India, according to reports. He was, inexplicably, the only person with access to $190 million of funds in cryptocurrencies and fiat money, the majority of funds stored on the exchange.

The immediate circumstances—dying in a place known for fake death certificates, from a disease that isn’t typically fatal to someone so young— were suspicious enough. But, as it turns out, what happened in the year leading up to the events of December and January makes the whole affair even more questionable.

The exchange faced financial difficulties throughout the year and may have lost a considerable amount of users’ money. This was supported by the recent announcement that the funds may not even exist. The CEOs of crypto exchanges Kraken and Coinbase have also backed this view. Kraken has since offered a $100,000 bounty for information about the case which has caused 115,000 people to lose their money. Right now, Ernst and Young are continuing to search for the missing funds. The QuadrigaCX affair has only just begun.

The two main events of the QuadrigaCX saga

A year ago, QuadrigaCX was in financial difficulty. Funds were being locked up and users were complaining. This was the beginning of a series of unfortunate events for the Canadian crypto exchange. Let’s look into the main events to see how the problems started.

The exchange’s finances were in ruin

QuadrigaCX, founded in 2013, was originally quite successful, quickly becoming the largest crypto exchange in Canada.

But things soon started going downhill. In January, 2018, the Canadian Imperial Bank of Commerce (CIBC) froze $30 million of funds belonging to QuadrigaCX because it couldn’t identify the owners of the funds. Customer complaints rained down on QuadrigaCX as people struggled to access their funds. This led to fewer people using the exchange and its daily trading volume dwindled to $600,000 by October, 2018.

This is one of the main signs that the exchange did not have financial security. Which brings us to the next point.

The circumstances of the death were suspicious

Not only was there a whole host of financial problems at QuadrigaCX that were neatly wrapped up when the CEO died, taking the “funds” with him but there were other odd factors surrounding his death.

Just two weeks prior, Cotten had changed his will leaving his personal property—worth $9.6 million— to his new wife, Jennifer Robertson. They had been together under two years. Despite the exchange’s financial difficulties, they managed to buy 16 properties together, plus a plane.

On December 8, 2018, QuadrigaCX CEO Gerald Cotten was admitted to the Fortis Escorts hospital, Jaipur, suffering from vomiting, watery stools and crampy abdominal pain. After his death he was transferred back to the hotel. Then his body was taken to an embalmer who refused to carry out such a treatment because the body had come from the hotel, not the hospital.

A second embalmer, a local medical school where they study cadavers, wasn’t so scrupulous and accepted the job. A hotel employee delivered the body to them, according to the certificate issued at the embalming centre.

A death certificate was made, misspelling the CEO’s surname as “Cottan.”

The next day police issued Robertson a certificate stating that she could take the body home.

The funeral took place in Halifax, Canada, around December 12, and, from witness testimony obtained by the Kraken exchange (which is investigating the case), it was a closed casket.

All of this happened before it was revealed publicly the CEO had died.

Both of these events have created a number of questions which will shall address later. For now, we need to take a closer look at who were the main individuals involved with the exchange—and who they might really be.

The main characters involved with QuadrigaCX

Aside from Cotten and his widow, Robertson, the two other main people behind the scenes at the exchange were cofounder Michael Patryn and lead developer Alex Hanin.

Cofounder and CEO of QuadrigaCX, Gerald Cotten

Born in Belleville, Canada, a southern Ontario city of 50,000 located at the mouth of the Moira River, Cotten would graduate with a BBA from the Schulich School of Business at the York University, in Toronto. According to a Bloomberg profile, he often spoke at fintech conferences, was a member of the Bitcoin Foundation and was an advisor for the non-profit Crypto Consortium.

He was known for being flush with cash, reportedly once carrying a suitcase full of cash through an airport. Some of the assets Cotten owned were revealed in his will. These included three properties, a Lexus car, an airplane, a 2015 Mini Cooper, and a 50-foot Jeanneau 51 sailboat. The will also bequeathed $100,000 to his in-laws to help them look after his Chihuahuas in case both he and his wife died. In the statement published after his death, he was called a “visionary leader.”

Cofounder of QuadrigaCX, Michael Patryn

Patryn founded Canada's first blockchain incubator, Fintech Ventures Group, and was an advisor to multiple crypto-related projects, before he met Cotten online and moved to Canada to start working on the exchange. He’s a personal trainer in Krav maga, Thai kickboxing and blade combat. Patryn has also been linked in the media to other, less savory pursuits.

According to a report by The Globe and Mail, Patryn might be the pseudonym of Omar Dhanani, a felon convicted of money-laundering-related charges for his role in a criminal organization known as “ShadowCrew.” Dhanani spent 18 months in prison for credit-card fraud.

Patryn has denied that he is Omar Dhanani. However, the Globe and Mail show a number of connections between the two persons, including a website called Midas Gold Exchange, which was owned by an “Omar Patryn” (the two names mixed together).

There is also, reportedly, evidence that Patryn tried to hide this connection. Court records show he hired Reputation, a Toronto-based company that removes online data about people. It then published made-up reports suggesting Patryn was a global speaker on blockchain technology and was a mixed martial artist. So perhaps, not even his hobbies are real.

It is unclear if Patryn was an active member of QuadrigaCX over the past few years. According to a public comment, he left the exchange three years ago. Yet Jesse Powell, CEO of the exchange Kraken, thinks this is unlikely. Powell, who has been obsessed with the case since it first broke, believes that after Patryn’s “true” identity was discovered, Patryn attempted to distance himself publicly from the company, while remaining active in the shadows.

Jennifer Robertson, the widow of Gerald Cotten

While Cotten ran QuadrigaCX, Robertson ran Robertson Nova Property Management which was registered at the former couple’s home in Kinross. During their relationship, they bought 16 properties, from a $70,000 USD waterfront lot to a set of nine row houses worth $1.9 million USD. Her company owns 12 of the properties. Since he died, she has taken out mortgages on four of the properties that were left to her in Cotten’s will. She has transferred ownership of two of them to The Seaglass Trust, where she is a trustee.

Robertson has been known as Jennifer Kathleen Margaret Griffith and Jennifer Forgeron in the past. On December 1, 2016, she officially changed her surname from Griffith to Robertson.

After Cotten died, Robertson quickly organized a shareholders meeting to appoint herself, her step-father (Thomas Beazley) and a man named Jack Martel as new directors of the exchange. The meeting was deliberately organized so that the other shareholders—beyond Robertson and Patryn’s wife Love Horner—would be notified by courier, instead of via email. It is not known if the other shareholders were aware of the meeting by the time it occured.

Alex Hanin, the chief architect of QuadrigaCX

Usually crypto exchanges have hundreds of developers maintaining regular backups and ensuring that everything is working smoothly. This wasn’t the case for QuadrigaCX, which relied solely on one contracter, Alex Hanin, whose role was “chief architect.” Patryn left a review for him on his LinkedIn profile which said, “Our competitors required teams in order to replicate the work of this one man.”

Yet, if this was the case, the exchange was likely cutting corners. Powell told Decrypt that—even if Quadriga did have just one developer—it would be a huge risk in case he was ill, adding that Kraken has more than 100 developers. He also expressed surprise that QuadrigaCX only performed backups every hour as this would miss out on potentially an hour of transactions if the exchange was to go down—leading to misattributed funds.

Powell said, “That seemed odd to me but maybe just indicative of shortcuts being taken. You’ll probably find this business is basically a façade with nothing really going on behind the scenes.”

Aside from these four figures, there were a handful of support staff for handling customer service tickets and other issues.

The most pressing questions about QuadrigaCX

Is Cotten dead? And, if so, how did he die?

Cotten suffered from Crohn’s disease. He was diagnosed six years ago, at 24. The cause of his death was listed as sudden cardiac arrest, stemming from a perforation of the stomach. But there is disagreement over whether this complication is normal for someone with Crohn’s. Jesse Powell argues that it’s not.

“It seems pretty likely that he is dead,” said Powell, during a Kraken podcast. “However there was no autopsy performed so there’s speculation over how he developed this perforated stomach in the first place. It doesn’t seem like a usual thing for someone with Crohn’s to develop.”

However, Jayant Sharma, the doctor who treated him, said that blood tests showed elevated levels of white blood cells, an indication of sepsis. He also said the body appeared to match photographs of Cotten. And Brian Feagan, a London doctor who specializes in Crohn’s says that Cotten’s rapid demise is consistent with what might happen to someone with Crohn’s disease who was suffering from septic shock.

So, despite some theories on Reddit, it looks like the death did happen.

But that's not enough for QuadrigaCX claimants who believe that there's a chance he may still be alive. According to Coindesk, law firm Miller Thomson has sent a letter to the Royal Canadian Mounted Police (RCMP), on behalf of the claimants, requesting for Cotten's body to be exhumed. Robertson's lawyer said she was "heartbroken to learn of this request."

Where is the $145 million worth of cryptocurrency?

Shortly after the death was revealed, a statement was made that Cotten died as the only person with access to $190 million of funds, with $145 million of cryptocurrency supposedly “locked up” in a cold storage wallet which can’t be accessed. Which is all well and good, but these wallets are empty.

A March 1, 2019, report by creditors Ernst and Young shows the cold storage wallets have just a few thousand dollars in them. It said that large amounts of funds passed through the cold wallets but were then sent to other accounts, including on other crypto exchanges. This means these funds may exist on other exchanges—but so far little progress has been made.

According to Kraken CEO, Jesse Powell, it is likely that the funds are held under fake names which makes it much harder for the exchanges to identify if they belong to QuadrigaCX.

One researcher known as “Zerononcense” claims to have found $100 million of QuadrigaCX’s funds through analyzing transactions on block explorers. But in an interview with Decrypt, Powell said he disagreed that the accounts belong to QuadrigaCX. He had looked at the ones mentioned on Kraken and found they were owned by other people.

This means the funds may be stored on an unknown exchange, under an unknown name. Or they don’t exist. Either way, Ernst and Young has its work cut out.

While the funds have not yet been found, there are a few plausible ideas why the sequence of events may have occurred. Let’s explore them next.

The most prominent theories to explain it all

The main theory is that QuadrigaCX was in financial difficulty but there is also speculation that the exchange was used for money laundering. It’s also possible that the whole thing was simply poor management.

The death was used to cover-up QuadrigaCX’s financial difficulties

The most likely explanation of the missing funds is that they didn’t exist in the first place. In June 2017, QuadrigaCX suffered a multimillion dollar bug which locked up a lot of its Ethereum funds in smart contracts, when the Ethereum price was only $250. Coinbase CEO Brian Armstrong speculated on Twitter that the exchange tried to trade its way out of the jam.

Powell pointed out that the price of Ethereum jumped up to $1,300, drastically increasing the liability to $90 million. However, he did say, “It would be hard for them to lose everything, I’m still hopeful they could find money on some of the other exchanges.”

Armstrong suggested the team behind the exchange may have decided to use Cotten’s death to hide the fact these funds were missing which would explain the statement that he died as the only person with access to these funds—despite the funds not being in the cold storage.

The exchange was a front for money laundering

Another possibility is that the exchange was involved in more nefarious work. If Patryn really was Omar Dhanani, then he had been previously involved a scheme that revolved around money laundering, known as Midas Gold Exchange (run by an Omar Patryn). This was shut down when Liberty Reserve was caught for money laundering.

“Definitely could be money laundering, based on some of the statements [Patryn] has made. He’s told people he’s a money laundering dream. QuadrigaCX was also doing cash withdrawals. I wouldn’t be surprised, given Patryn’s past.” Powell said, adding, “He might have even had the idea to start the exchange because it might be great for money laundering.”

It was simply poor management

It’s possible that the exchange was just understaffed and too many corners were cut. This could have resulted in bad management and a lack of accounting.

Running a crypto exchange is a complicated business that gets even more complicated the larger it is.

And in the end, if the failure of QuadrigaCX was due to mismanagement, this could be the most unsettling explanation of all. There are an estimated 215 crypto exchanges around the world, handling billions of dollars invested by millions of people. Many of them exist outside any regulatory framework. More than 36 exchanges have already failed or been hacked or otherwise lost investors funds.

It’s not a question of whether another QuadrigaCX is going to happen. It’s simply a matter of time.

These theories are mainly speculation based on what we know right now but keep tuned for further updates of the QuadrigaCX affair. Right now, scroll down to see a timeline of events and keep scrolling onto the next page below for the full interview with Powell.

A timeline of the QuadrigaCX saga

For a more indepth timeline, see Amy Castor's report.

2013:

December 26: QuadrigaCX is launched.

2018:

July 12: QuadrigaCX posted: “As you are likely aware we have been experiencing a whole host of banking issues with the hostile Canadian banking system over the past few months.”

Nov 27: Cotten created a will leaving everything to wife: $9 million of assets.

November 30: Cotten and wife Jennifer Robertson arrived in New Delhi, India, to celebrate their honeymoon.

December 9, 2018: QuadrigaCX CEO Gerald cotten died. (There were no other officers or directors)

2019:

January 14: Cotten’s death was publicly announced. Aaron Matthews was appointed as interim president and CEO.

January 26: The exchange’s website was shut down and the platform paused.

January 27: A meeting of directors was held, appointing Jennifer Robertson, Thomas Beazley (her step-father) and Jack Martel as directors.

January 29: Robertson took Cotten’s name off four properties and transferred two of them to a newly set up trust of which she is a trustee.

January 31: Robertson says QuadrigaCX’s customers are owed $250 million CAD ($190 million).

January 31: QuadrigaCX files for creditor protection.

February 5: Court appoints Ernst and Young to oversee proceedings.

February 5: The judge orders a stay of proceedings, extending the time to search for the funds.

February 11: Martel resigned from QuadrigaCX’s board of directors.

February 14: All remaining cryptocurrencies were transferred to Ernst and Young.

March 1: Ernst and Young reveal that the cold wallets are almost empty.

Additional reporting by Decrypt senior writer Adriana Hamacher.

Please note: This article has been amended to not state that Robertson's name changes were presumably as a result of getting married.

Update [December 16, 2019 10:22 UTC] - The creditors's request for exhumation has been added.