The number of bitcoin in Quadriga’s possession is substantially less than what was reported in the affidavit filed by the wife of the exchange's allegedly deceased CEO.

A leading crypto researcher claims that Canadian crypto exchange Quadriga, which announced the death of its founder and CEO – the only person with access to about $145 million in crypto and cash held in its user's «cold wallets» – never had access to such funds, and was recycling customer money a long time before Gerald Cotten's alleged death in December 2018.

«It appears that there are no identifiable $BTC cold wallet reserves for QuadrigaCX. I tracked back several dozen wallet addresses from verified deposits and withdrawals initiated by customers and none sourced to any vast source of Bitcoin owned by QuadrigaCX,» said Peter Mercury, who goes by the moniker Crypto Medication, on his personal Twitter account.

Mercury used customer deposit information voluntarily offered to him to ascertain a few known locations that Quadriga used to either store or send bitcoin. Once these initial addresses that Quadriga used were verified, they were then used as a baseline to validate all additional information being submitted by the community at large. He then used a bitcoin block explorer to associate wallet addresses with related transactions via a process called «address clustering.»

Re-routing Payments

The report, published in full on 5 February at industry portal Zerononcense, of which Murphy is the editor, said that the key takeaway is that Quadriga more than likely never held enough $BTC to account for the customer funds. Customer withdrawal information related to $BTC transactions on the exchange reflects that Quadriga was «clearly re-routing payments from customers to satisfy withdrawal requests from other customers on their exchange, effectively operating a shell exchange or a ponzi.»

Additionally, the research notes that supposedly locked cold wallets have been posting transactions long past Cotten's alleged death on December 9 during his honeymoon in Jaipur, India.

Quadriga's alleged cold reserves, detailed in an affidavit filed by Cotten's wife Jennifer Robertson with the Supreme Court of Nova Scotia (Canada) on 31 January for creditor protection from the courts, include 26,500 BTC, 11,000 bitcoin cash, 11,000 bitcoin SV, 35,000 bitcoin gold, 200,000 litecoin, and 430,000 ethereum, totaling about $150 million