The former Canadian crypto exchange giant, QuadrigaCX, has now been tagged as a Ponzi scheme, according to Canadian authorities.
After a thorough investigation, the Ontario Securities Commission (OSC) has concluded that QuadrigaCX (Quadriga) was a Ponzi scheme operated by the company CEO and co-founder, Gerald Cotton. The OSC believes this was the reason for the exchange’s demise.
According to the OSC’s report, at least $160 million of investors’ money could not be accounted for or accessed after Cotton’s death back in December 2018. Speculations surrounding the shortfall was that Cotton was the only person who had access to the crypto assets. The OSC found the speculation to be false, stating that about $115 million of the missing assets was as a direct result of Cotton’s fraudulent activities.
As for the remainder of the money, “Cotten lost an additional $28 million while trading client assets on three external crypto-asset trading platforms without authorization from, or disclosure to, clients. He also misappropriated millions in client assets to fund his lifestyle,” the report added.
After an extensive 10-month investigation, the OSC has concluded that Quadriga ran its fraudulent operation freely, much as a Ponzi scheme would.
With Cotton being dead and Quadriga bankrupt, there is a little criminal action that can be brought by the OSC.