Crypto Scam?
$250M Gone After Quadriga CEO Declared Dead
Investor Confidence In Cryptocurrency Dissipated Following The Quadriga Scandal
Ever wonder why cryptocurreny is still considered a risky business after it has been around for a decade, with its its value risen from ground zero all the way to some $20K a year ago, before tumbling down to about $3K now?
Saved for gold-rush speculators, most conservative investors are not exactly comfortable with cryptocurrency simply because it's backed by nothing, not regulated, and not insured. In the event of any dispute, investors are essentially on their own.
Quadriga founder's widow alleges $250M in assets locked by passwords that Gerald Cotten took to grave
Just imagine, an operation involving hundreds of million dollars public fund is completely under the control of one man, Quadriga CEO Gerald Cotten, who "allegedly passed away in India" in December. And there goes all the money with practically no recourse whatsoever for investors.
Gerald Cotten, CEO of QuadrigaCX died Dec. 9 in India due to complications from Crohn's disease (Gerry Cotten memorial/Facebook)
It's scary, to say the least.
Personally, the Quadriga incident is a blessing in disguise as I was about to sink all I have into Bitcoin. Now I gotta think not twice, but trice. And in the event I decide to invest in cryptocurrency, it will be minuscule in amount.
Is Quadriga A Ponzi Scheme?
As the old saying goes, if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.
While Nova Scotia Supreme Court granted Quadriga creditor protection and ordered Ernst and Young to take possession of the laptop. as the embattled cryptocurrency exchange says it cannot access some $250 million worth of customers’ cyrptocurrency stored in virtual safes that may only be accessible through its defunct CEO’s encrypted laptop.
Quadriga mystery deepens with little evidence of cold wallets containing $250M
A cryptocurrency analyst says there is little evidence that tens of millions of dollars of assets allegedly trapped on hard drives belonging to the deceased founder of a Canadian cryptocurrency exchange are being stored in so-called cold wallets.
But experts who have analyzed publicly available cryptocurrency transfer patterns say there’s little sign of digital vaults stuffed with millions and linked to Quadriga.
“All the analysis done so far has turned up no sign of the cold wallets they’ve been talking about,” Max Galka, cofounder and CEO of Elementus, an analytics firm told the media.
“Cold wallets” is crypto lingo for virtual storage where companies often hold the majority of their funds. Because they’re held offline, cold wallets are deemed more secure than so-called hot wallets, which are maintained on servers and generally handle day-to-day transactions, much like the cash sitting at a bank teller’s desk.
Instead, the company appears to have been transferring money from its hot wallets to other crypto exchanges, Galka said.
The company currently has only $375,000 in cash and owes to more than 100,000 customers a total of approximately $250 million, $180 million of which is in cryptocurrency, according to court documents.
When Galka analyzed Quadriga’s history of transactions in Ethereum, he found no evidence of cold wallets holding millions.
There are about 60 million accounts on the Ethereum blockchain and only around 20 that hold the balance that Quadriga claims to have. But none of them seem to belong to the exchange, Galka said.
“We have looked at every single address on the blockchain that Quadriga transacted with — it’s hundreds of thousands of addresses — and, in our opinion, none of them even remotely fits the profile of a cold wallet.”
http://goodizen.com/crypto-scandal-is-quadriga-a-ponzi-scheme/