In Netflix’s ‘Trust No One: The Hunt for the Crypto King,’ director Luke Sewell explores what happened to QuadrigaCX and its CEO, Gerald Cotten. Gerry’s sudden death in December 2018 left the company struggling to pay back the customers that had used the platform for cryptocurrency exchange. In the days after Gerry’s death was announced, creditors learned that the CEO had made fraudulent transactions with their money without their knowledge. So, if you’re wondering what became of the millions that the customers invested, we’ve got you covered.
Did QuadrigaCX’s Users Get Their Money Back?
After Gerry Cotten set up QuadrigaCX in 2013, it grew into the largest cryptocurrency exchange platform in Canada. It seemed to be a trustworthy place to conduct digital currency exchanges, with a license from FinTRAC, Canada’s anti-money-laundering authority. However, Gerry suddenly died while on his honeymoon in Jaipur, India, and the company waited more than a month to make an official announcement. By then, users had already faced issues withdrawing their money from Quadriga.
After the public announcement, Quadriga’s users tried to take their money out, only for the website to go dark. It was reported that Gerry was the only person with access to the CA$215 million in cryptocurrency and cash. The funds were supposedly stored away in cold wallets, an offline system designed to protect against hackers. However, nobody, including Gerry’s wife, Jen, had access to it. Only Gerry could transfer money from cold wallets to a hot wallet where customers could access their money.
The company was granted bankruptcy protection by February 2019, but an investigation soon revealed what happened to the money. QuadrigaCX had been facing liquidity issues since January 2018, and Gerry had carried out several fraudulent trades using his clients’ funds. He opened several fake accounts under various aliases and reportedly traded with customers using fake currency and crypto-assets. When Gerry started incurring losses when the price of cryptocurrency dropped, he covered it up with other clients’ deposits.
Gerry was, in effect, running a Ponzi scheme, with the authorities calling it “an old-fashioned fraud wrapped in modern technology.” Ultimately, only about CA$34 million was recovered, with the cold wallets nearly empty. In addition, Jennifer gave up about CA$12 million as part of a voluntary settlement. Reports have indicated that almost all of the remaining money in cryptocurrency is possibly being held under different names, making it difficult to identify what belongs to QuadrigaCX. While some investors have been part of a lawsuit looking to get the stolen money back, the chances of all of it being recovered are slim.
How Much Money Did Gerald Cotten Steal?
Since the authorities recovered around CA$46 million, leaving a hole of CA$169 million, which is still missing. The investigation revealed that Gerry Cotten lost approximately CA$115 million while trading fake assets using different aliases. Then, about CA$28 million of the funds were lost through Gerry conducting trades on external cryptocurrency trading platforms.
About CA$1 million was attributed to operating costs, and about CA$2 million, in effect, was used to fund Gerry’s lifestyle. In the end, the authorities couldn’t accurately determine what happened to the remaining CA$23 million because of limited records but believed they were used as part of the other expenses mentioned above.