Gerald Cotten, chief executive officer of QuadrigaFacebook / Remembering Gerry Cotten
It’s a long, hard ordeal being a claimant to the bankrupt cryptocurrency exchange QuadrigaCX. The recent revelation of coins being moved from long-dormant wallets is just a tiny reflection of that.
I would know, because I am one of those people who lost money on Quadriga, where people could buy and sell cryptocurrency. I’ve even once shaken the hand of the founder Gerald Cotten, who brought down the entire exchange when he was reported dead in the beginning of 2019, making some $200-million in cryptocurrency go up in smoke.
And I would like to say something to customers of FTX, the bankrupt exchange based in the Bahamas, whose founder Sam Bankman-Fried faces an assortment of criminal charges in the United States: Take it from someone who has gone down this road – three years later, through a complex legal system and endless red tape, you still won’t see a red cent.
First off, though, do not feel sorry for me. While my ether coins that were on Quadriga are worth tens of thousands of dollars now, they were worth only a fraction of that when the platform went down. I had completely forgotten that I had anything on Quadriga until it collapsed.
Still, though, who wouldn’t want a couple of extra tens of thousands now? It’s definitely a significant amount of money.
That process of trying to get my money back has been frustrating and disheartening. The court has appointed a bankruptcy trustee, Ernst & Young, and law firm Miller Thomson LLP, to represent all Quadriga users. That is about the only meaningful information that I know off the top of my head. Half the time, I have no idea what’s going on.
Miller Thomson twice sent letters to the Minister of Public Safety requesting that the RCMP exhume Mr. Cotten’s grave to confirm his identity, owing to speculation he faked his death. One of them, strangely, was kept confidential. The law firm refused to give me a copy of the letter when I asked. I ended up filing an access-to-information request for it with the ministry. I have no idea of its current status.
Some time last year, I stopped getting regular e-mail updates from Miller Thomson, even when updates were posted on its website. It appeared that I was taken off the list for some reason. I raised this with the law firm and was told: “We will ensure our database is updated.” I’m still waiting.
It feels as if we are no closer to getting our money back than we were when QuadrigaCX first collapsed. And now, with the recent revelation that more than 100 bitcoins previously held in inaccessible virtual wallets have been transferred, it feels as if we are even further away from recovering our funds.
In 2019, coins had been essentially misplaced under the watch of EY, when they were transferred to a digital wallet over which it had no control – the very trustee that was supposed to help the users. Now, neither EY nor Miller Thomson has any information on what happened. This does not exactly inspire confidence.
There is also the matter of the taxman wanting to wet his beak on the spoils. One of the reasons cited by Miller Thomson for why the Quadriga bankruptcy is dragging on this long is that the Canada Revenue Agency wants to conduct an audit to determine taxes owed by Quadriga.
Of the little money that remains in Quadriga, after paying off lawyers and the taxman, how much of it will trickle down to the users? I can’t say, but let me direct you to an even older such event.
In 2014, Tokyo-based cryptocurrency exchange Mt. Gox imploded and a New York private firm was going around trying to buy users’ claims for 10 cents on the dollar. Yet even now, no Mt. Gox user has seen a cent, as the case meanders through the Japanese bankruptcy process.
For those who used FTX as your exchange of choice, no doubt, your experiences will be similar to mine. Treat your money as already gone. It will be less heartache.