A Wall Street Journal report has recently come out which states that the now expired founder of Canadian crypto-exchange firm QuadrigaCX may have spent a portion of the money entrusted to him on personal expenditures. The WSJ derived this information from reports that were released a week ago by court-ordered investigators.
CEO Gerald Cotton was said to have been suffering from Crohn’s Disease which led to complications resulting in his eventual death in December 2018. The company has said that Cotton was the only person who could access the exchange’s cold storage, which is where client holdings were stored.
CQX Holdings was audited by Ernst & Young when the firm declared bankruptcy in January, this year. The auditing company found that most of these wallets contained a deficit of crypto owed to the clients and were drained approximately 8 months before the CEO’s unfortunate demise.
The exchange that should have had deposits amounting to $214million only had about $33 million at the time of audit. E&Y believes that Cotton siphoned off money from client accounts in Quadriga to accounts he held illicitly under assumed names.
There were instances of some significant transfer of funds to the CEO and his wife’s accounts. Neither of them had any income source outside the crypto exchange and yet did not seem to have filed any tax returns on any income derived from the company. Despite this, the couple frequently took foreign vacations using private jet services and also had multiple assets including real estate.
The transfers that the audit firm discovered had no supporting documents to prove their credibility. They also found cash transfers into QuadrigaCX accounts but couldn’t verify if these transfers were made into user accounts. E&Y said they found no documentation on financial transactions facilitated by the company since as far back as 2016.

Gustavo Fonseca loves anything digital and crypto-related which makes him sit up and pay attention. He got into the world of digital marketing and business digital transformation career in 2010. Some time later he got into Crypto, a dynamically developing segment at the intersection of the financial services and technology. Gustavo joined TheDailyCoins in September 2018.