Quadriga CX, the well-known collapsed Canadian cryptocurrency exchange, was reportedly a financial pyramid. Such a theory was made by investigators investigating the company-related scandal.
Quadriga CX pyramid?
“What happened at Quadriga was an old-fashioned scam wrapped in modern technology. There is nothing new in financial pyramids, unauthorized transactions with customer funds and the acquisition of assets. “
– wrote the Securities Commission in Ontario (OSC) in a report published a few days ago.
This is the fruit of the OSC investigation lasting nearly a year. Investor losses were not at all caused by the fact that the stock market portfolio passwords were lost after the death of the company owner.
“Most asset losses – approximately CAD 115 million (USD 84 million) – were the result of fraudulent transactions on the platform. [Gerald] Cotten [właściciel giełdy – przyp. bitoin.pl] he opened his own accounts under false names, writing on his accounts non-existent assets in currencies and cryptocurrencies, which he traded with unsuspecting clients. “
– wrote in the report.
It was also found that Cotten covered the company’s losses from customer deposits, “Which means that Quadriga acted like a financial pyramid.”
It is known that Cotten lost 28 million (USD 20 million) because it thoughtlessly invested these funds on other cryptocurrency exchanges. He spent some funds on his own expenses.
“At the end of Quadriga’s activity, it had almost no assets and acted like a revolving door – new customer deposits were immediately redirected to cover other customers’ withdrawals”
– continued in the report.
Apparently he did not come earlier because of some ignorance of officials. He used, for example, faith in the transparency of blockchain technology. Added to this are weak regulations on the cryptocurrency market in Canada.
“From 2016, Cotten was the only company controlling a company that had hundreds of thousands of customers and through which over one billion dollars of currency transactions and more than 5 million cryptocurrency units. He acted as he wanted, without internal control systems and accounting. “
– experts add.
Let us remind you that officially the company’s problems began at the end of 2018, when Cotten died during his trip to India. People associated with the stock exchange argued that the stock market cannot pay customers their funds because they are on wallets that only Cotten had access to.