Since QuadrigaCX first started having "liquidity issues" late last year, aggrieved clients of the crypto exchange have been subjected to one wild twist after another, all of which have supported the conclusion that the roughly $150 million in customer deposits (estimates of the total sum vary) has mysteriously vanished, and will likely never be recovered.

In January, the exchange revealed that its co-founder and CEO, Gerald Cotten, had died suddenly from complications related to Crohn's disease during a vacation in India. Cotten was responsible for the exchange's day-to-day operations, and in a bankruptcy filing, his widow claimed that he had taken the keys to the exchange's 'cold storage' wallets to his grave. Efforts to infiltrate the wallets proved futile, and according to the exchange, it appeared that customers' coins would be trapped forever.

But as amateur sleuths and the auditing firm retained by the exchange dug deeper, inconsistencies began to emerge. The exchange refused to reveal the public addresses of these wallets. And when the auditors finally got them, they found that six wallets that were supposed to hold nearly $100 million in coins had been emptied months before Cotten's death.

Gerald Cotten

Weeks later, Bloomberg reported that a co-founder of the exchange who eventually quit had once been jailed for fraud.

All of this came as a shock to the exchange's clients. At one point, Quadriga had been the largest crypto exchange in Canada. And according to a regulatory attorney who had been retained by the firm during its early days, at one time, Cotten had been on the path to building the most transparent and secure exchange in Canada, if not the world. Quadriga had four law firms advising it. It hired an auditor, and even secured insurance for its cold-storage deposits.

Then one day, he suddenly broke bad, fired all the outside advisors and auditors, and decided to go it alone, according to Christine Duhaime, a lawyer who had been working with the firm. Duhaime shared her experience with Quadriga during a lengthy essay published earlier this week on CoinDesk.

As Duhaime put it, Cotten wanted to get rid of all the "'law and order' folks."

The QuadrigaCX story is by no means over but our bit of the story ended abruptly one morning when its CEO, Gerald Cotten, made the decision that he no longer wanted QuadrigaCX to be a listed company. On that day, he terminated the professionals that were, in his mind, the "law and order" folks – the accountant, the auditor and me, the regulatory attorney. From that moment onwards, Mr. Cotten solely took over QuadrigaCX and operated the exchange as if it had no investors, no shareholders, no regulatory agencies and no law that applied to it – no corporate law, no securities law, no anti-money-laundering law and no contract law. I don’t know why Mr. Cotten decided to eschew regulatory law but I never spoke with him after that day. (In January of this year, QuadrigaCX announced he had died a month earlier.)

From there, Duhaime's story gets even stranger. According to the essay, she was never privy to the motivations behind Cotten's decision. Though a few months before her firm was brought on, Quadriga separated into three separate companies, allowing it to take on a raft of new shareholders, many of whom hadn't been vetted.

Why is this relevant? Duhaime can't say for sure, but while she was working on Quadriga's account, she came to believe that the whole Quadriga team fell under the impression that the company had unwittingly stumbled into a "Vancouver pump-and-dump scheme". Duhaime doesn't provide any more details about this supposed scheme, saying only that the team consisted of tech professionals who were unfamiliar with the vicissitudes of financial markets.

No story of QuadrigaCX is complete without understanding one more fact – six months before we were retained, it had gone through a court-approved plan of arrangement and become three companies, and as a result, it inherited a slew of new shareholders it knew nothing about. (A fourth company was later set up.) It is my belief that the whole QuadrigaCX team came to believe that the company may have unwittingly become involved in a Vancouver pump-and-dump scheme. Whether it had been drawn into a pump-and-dump is not for me to say because it was before my time, but I can say that QuadrigaCX was run by tech geeks, who were competitive, ambitious and smart but who were unfamiliar with the capital markets ecosystem in Vancouver.

Though most of her essay focuses on the team's good intentions, the fact that Cotten made this abrupt, unexplained change may suggest that whatever issues resulted in the loss of its customers' coins - assuming it wasn't outright theft by Cotten or his associates - Cotten may have tried to conceal it for years.

Customers have been impacted to varying degrees. One Canadian software engineer lost his entire life savings. Another crypto trader lost $75,000 due to one ill-timed trade. And while it's likely they will never recover their money, we can only guess what the next Quadriga-related bombshell might reveal.

Read the full essay here.