Surely there’s nothing odd about the QuadrigaCX exchange story? Yes, Gerald Cotten, CEO of Canada’s largest exchange suddenly drops dead in India, at the age of 30, from a disease that’s rarely, if ever, fatal in one so young. And yes, he was the only person with access to $190 million of the exchange’s funds.

But that was the end of it. An unfortunate story but surely it all comes down to a bit of bad luck, a quirk of cryptocurrencies and a lack of proper fund management.

Well, not quite.

Since then, the court appointed monitors Ernst and Young have said that the cold wallets—devices that secure cryptocurrencies offline—are mostly empty, meaning the funds might be squirreled away on other exchanges, or gone.


And naturally the case has attracted the attention of law enforcement in Canada and the U.S. FBI.  Meanwhile, in the crypto community, the story has dominated headlines since day one. On February 28, Californian crypto exchange Kraken—one of the oldest, and most reputable exchanges—offered a bounty of $100,000 to anyone with information about the affair that leads to a conviction.

We sat down with Kraken CEO Jesse Powell to chat about why he thinks a bounty was desperately needed. He cited five suspicious things that prompted him to get involved:

1. Only one developer was maintaining the entire exchange.

According to court documents, QuadrigaCX had only one developer: Alex Hanin. This man was solely responsible for the workings on Canada’s largest crypto exchange. QuadrigaCX cofounder Michael Patryn was so impressed with Hanin’s work that he left this review for him on his LinkedIn profile: “Our competitors required teams in order to replicate the work of this one man.”

Indeed, that actually understates how unusual having a one-man dev shop is: Kraken, for example, has more than 100 developers working on the exchange. How was this man able to perform the work of so many people?


“It’s totally insane. Maybe this guy is the most productive developer in history,” Powell-told Decrypt. But, he added, even if Hanin was the most brilliant and productive developer on the planet, vesting him with so much authority creates a “key-man risk.” In other words, Powell said, if “one man gets hit by a bus, the whole exchange is down.”

He said a related peculiarity was that Hanin was only making  backups of the exchange every hour. This means, if it went down, there’d be no record of made for up to 60 minutes. Powell said that that’s why, typically, exchanges backup all transactions in real time. On this basis alone, he alleged that, “you’ll probably find this business is basically a façade with nothing really going on behind the scenes.”

2. QuadrigaCX had probably run out of money

If there was one thing lacking about QuadrigaCX, it was an absence of clear accounting of funds. While this has caused a headache for Ernst and Young, crypto natives Coinbase and Kraken have looked into the transactions, finding that the exchange lost a lot of money in 2017–and might have been covering its tracks ever since.

Coinbase CEO Brian Armstrong said on Twitter the exchange suffered a multimillion dollar bug due to a problem with Ethereum smart contracts. He then speculated QuadrigaCX may have been trying to trade itself out of this hole.

Powell concurred, pointing out that it was a loss of $14 million--which increased fivefold when the price of Ethereum jumped from $250 to $1,350. He pointed out that one of the Quadriga developers—which he figured was Alex Hanin as he was the only developer—commented in favor on a Github proposal to redeem funds held in these trapped smart contracts. He suggested the exchange might have carried on, hoping the funds would at some point come back.

However, Powell said he hoped that the exchange had not lost all of the missing cryptocurrency. He said, “It would be hard for them to lose everything, I’m still hopeful they could find money on some of the other exchanges.” So far, Ernst and Young have suggested funds could be on up to 14 other exchanges, but that only four had cooperated so far.

3. The timing of the death is suspicious

It’s true that Cotten suffered from Crohn’s Disease, and it is likely he was under a huge amount of stress that could have exacerbated the disease, Powell conceded. India is a tough place for a foreigner with a bad stomach to travel around.

Yet, Cotten died of a heart attack just two weeks after making a will leaving $9 million in assets to his new wife, Jennifer Robertson. Powell said, “It seems a really suspicious death. It was so conveniently timed.”


No autopsy was performed and the body was flown back to Canada where a funeral service was held on December 14, before the news about his death was publicly available. That, of course, raises even more questions.

4. Was Michael Patryn still involved?

There has been a lot of speculation over whether Michael Patryn, cofounder of QuadrigaCX, was in fact Omar Dhanani, a convicted fraudster. The notion was first picked up on Reddit about a year ago, and the Globe and Mail has produced convincing proof that Patryn and Dhanani are the same person—despite Patryn denying it.

Powell said he’s convinced they are the same person: “It’s the same exact face. Same ears. Same dimple on his forehead. No doubt it’s the same guy, unless he has a twin brother.”

Even if that turns out to be the case, however, Patryn had not been working at QuadrigaCX for the past three years. This was said to be over a fight with Cotten about taking the company public.

Powel, however, continues to have doubts believing that he may have continued to work with the exchange and publicly distanced himself after rumours started appearing about the possible connected to Dhanani.

5. The exchange may have been a front for money laundering

Dhanani had been engaged in various acts of money laundering and was convicted of trafficking stolen credit cards in 2006 as a member of shadowcrew. Working for them he ran an electronic money-laundering service. He also set up Midas Gold reserve (under the name Omar Patryn) that worked with Liberty Reserve, which laundered $250 million before it was shut down (and its founder was sentenced to 20 years in prison.)

Powell speculated that if indeed Dhanani was involved here, QuadrigaCX could have been specifically set up for a similar scheme. “Definitely could be money laundering, based on some of the statements [Dhanani’s] made,” Powell said, adding that Dhanani has “told people he’s a money laundering dream.”

If you have any information regarding QuadrigaCX, make sure to submit it to Kraken’s bounty program or inform the Royal Canadian Mounted Police. For updates, make sure to keep reading Decrypt.


Please note: This article has been updated to not state that Cotten was cremated.

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