main conclusions

• QuadrigaCX filed for bankruptcy in 2019 after its CEO Gerald Cotten died in mysterious and sudden circumstances.
• Cotten turned out to be the only one with access to cold wallets containing funds
• It was later revealed that Cotten was scamming customers with QuadrigaCX in a pyramid scheme.
• Over 100 BTC mistakenly transferred to wallet in 2019 following bankruptcy filing, with EY trustee saying funds were lost because no one had access to them
• This weekend, wallets appeared, with funds transferred to a cryptocurrency mixing service.

Dormant bitcoin wallets belonging to the controversial exchange (no, not that one) QuadrigaCX woke up this weekend. More than 100 bitcoins tied to the old exchange have come out of cold wallets that until now were thought no one could access.

QuadrigaCX, for those unfamiliar, is the exchange founded by Gerald Cotten and the subject of Netflix’s gripping drama “Trust No One: The Hunt for the King of Crypto.” It was one of the first mainstream exchanges, handling over 80% of Canadian Bitcoin volume at one point. The only thing is that it was all a scam.

What happened to QuadrigaCX?

It filed for bankruptcy in 2019, owing nearly $200 million to its clients. It was later revealed to be a pyramid scheme, with Cotten opening accounts under pseudonyms and crediting himself with fictitious balances, which he then traded with unsuspecting customers. He lived a double life the whole time, and the exchange was nothing more than a front for an old-fashioned scam.

Big Four firm Ernest and Young (EY) is the trustee in bankruptcy and provided an additional layer of intrigue when it reported that the company had mistakenly sent 100 bitcoins to a wallet it could not access.

“On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins… to Quadriga cold wallets which the company currently does not have access to. Monitor is working with management to recover this cryptocurrency from the various cold wallets if possible.

CEO dies under mysterious circumstances

The reason this wallet was inaccessible, of course, is that CEO Cotten died under mysterious circumstances while on a trip, spawning a million conspiracy theories. Apparently, he was the only one with the keys to the offline wallets containing the cryptocurrencies, which is why many accused him of faking his own death.

This weekend, the cold wallet that received those 100 BTC in 2019 suddenly became active again. Sent 36 BTC of this portfolio and 33 BTC of this portfolio, which were two of the largest transactions. But more than the amount, the destination is interesting – the coins were sent to the Wasabi mixing service, a crypto mixing service, which acts to disguise the origin and destination of crypto funds.

What does it mean?

So is Gerald Cotten alive and well swimming in his bitcoin savings?

Magdalena Gronowska, bankruptcy inspector and member of Quadriga’s creditors’ committee, said the funds were not transferred by EY. And previous reports from EY indicated that Cotten was the only one with access to the wallets.

Honestly, nobody knows. It’s just another layer of mystery in a story that was already as bizarre, confusing, and obscure as it gets. The only certainty we have is that Gerald Cotten was a fraud and QuadrigaCX was a scam, and now the coins he was supposed to have sole control of – which were considered lost, given that he is deceased – are moving again.

So either Cotten is alive or someone else has access to those wallets. But if the actor was legit, let me ask you this: why are they sending the funds to a mixing service?