Canadian cryptocurrency exchange QuadrigaCX has been in the news regularly throughout 2019. Now, victims of its controversial fund losses are set to receive compensation from the founder’s widow.
Jennifer Robertson, the widow of late QuadrigaCX founder Gerald Cotten, released a personal statement on October 7, 2019, agreeing to forfeit a majority of her assets to those who were affected by its impropriety. An accompanying statement from the exchange’s court-appointed trustee, Ernst & Young, indicated that the estimated value of these distributions is approximately $9 million ($12 million CAD).
“Following the sudden and unexpected death of my husband, Gerald (Gerry) Cotten, I made every effort to assist in the recovery of QuadrigaCX assets for the benefit of Affected Users,” her statement reads. “I have now entered into a voluntary settlement agreement where the vast majority of my assets and all of the Estate’s assets are being returned to QCX to benefit the Affected Users. These assets originally came from QCX at the direction of Gerry.”
Robertson also reiterated that she had no prior knowledge of how Cotten ran the exchange prior to his death in 2018. However, given the recent revelations about his improper conduct, she believes that placating users is the right thing to do.
A Rocky Road for QuadrigaCX
The problems at QuadrigaCX started surfacing in January 2019, when it announced that it was insolvent, owing clients about $250 million CAD, following the death of Cotten in December 2018. Then, on February 5, 2019, a Canadian court granted it bankruptcy protection. Later that month, it emerged that the exchange had sent approximately $355,000 worth of bitcoin to a cold-storage wallet “inadvertently” and, in April 2019, investigation by Ernst & Young suggested Cotten had been financing personal expenses with company funds.
Most recently, in June 2019, Ernst & Young estimated that the missing funds totaled $214.6 million CAD, only $33 million CAD of which it was able to recover. It also found that Cotten was using fake accounts to trade nonexistent funds with real users, cycling the resulting cryptocurrency through other exchanges. Cotten also reportedly incurred fees and losses due to these trades, adversely affecting Quadriga’s asset reserves.
Robertson denounced her late husband’s criminal activities in her recently released statement, adding that she would turn over assets accrued from his illegal wealth to QuadrigaCX’s customers who were left stranded by his sudden death.
“As a result of the Monitor’s investigation, I have agreed to return to QCX assets that I had previously thought were purchased with Gerry’s legitimately earned profits, salary, and dividends,” she wrote. “I was upset and disappointed with Gerry’s activities as uncovered by the investigation when I first learned of them, and continue to be as we conclude this settlement.”
In doing so, Cotten’s widow hopes to appease QuadrigaCX’s victims.
“In return, this settlement will allow me to move on with the next chapter of my life,” she concluded.
Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.