Coinbase CEO Brian Armstrong recently offered his theory on what he believes really happened to beleaguered Canadian crypto exchange QuadrigaCX in a series of tweets posted on February 21.

There has been a lot of speculation in recent weeks about what really happened to what once was Canada’s largest cryptocurrency exchange. Many people believe that the QuadrigaCX drama is part of an elaborate exit scam, with some going so far as to claim that co-founder Gerald Cotten might not actually be dead, as was reported last month.

At stake is nearly CAD $190 million (USD $146 million) in user funds that have gone missing, supposedly sitting in cold wallets that nobody at QuadrigaCX has access to due to the late Cotten reportedly being the only person who had access to the wallets’ private keys.

While nobody yet knows for sure what really happened, the cryptocurrency community is rife with theories. One of the latest people to offer their take on the situation is Brian Armstrong, CEO of the US-based crypto exchange Coinbase.

Brian Armstrong Weighs in on QuadrigaCX

Friday afternoon, Armstrong took to Twitter to post the results of Coinbase’s own research into the matter, cautioning readers that it was just their “best guess” and nothing more than “pure speculation”.

Wanted to share a summary of what we believe happened to QuadrigaCX. We did our own internal research, including some blockchain analytics, to see if we could help. Important to note that this is just our best guess. Take it as *pure speculation*, nothing more. — Brian Armstrong (@brian_armstrong) February 21, 2019

During the course of Coinbase’s research, Armstrong said that they had identified what they believe to be QuadrigaCX’s manually controlled cold storage wallets. He noted that they began to see the movement of funds to cold storage in June 2017 following the discovery of “multimillion dollar bug” in its ETH/ETC splitter contract and that balances has been moved out by early 2018.

So does this movement of funds point to an exit scam, as many in the crypto community believe?

Not according to Armstrong.

Based on his findings, Armstrong believes that QuadrigaCX may have been trying to trade its way out of the hole it had found itself in.

4. Patterns of sends from cold storage suggest they tried keeping exchange afloat, and maybe attempted to trade their way out of a hole; (again just a guess here) — Brian Armstrong (@brian_armstrong) February 21, 2019

Unfortunately, the bear market that plagued most of 2018, combined with a lack of liquidity, may have been more than the exchange could overcome.

Suggesting mismanagement, rather than an outright intent to scam customers, as the likely reason behind QuadrigaCX’s actions, Armstrong stated:

This implies that at least few people inside Qadriga knew that they were running fractional. If so, then it's possible that untimely death of their CEO was used as an outlet to let the company sink. — Brian Armstrong (@brian_armstrong) February 21, 2019

Of course, this is still all speculation, as Armstrong himself said at the outset. He acknowledged that it is entirely possible that they will find out that they were completely wrong as the case unfolds and new facts come to light.

Something else to leave you with, Armstrong makes another good point in his theorizing:

QCX was one of the oldest exchanges in existence (founded in 2013). If they planned an exit scam, it likely would have been timed better.

Do you agree or disagree with Brian Armstrong’s theory? Let us know in the comments below!

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