If you spend much metre online , it ’s passably vulgar to hear the worlds of cryptocurrencies , NFTs , and the like described as “ scams . ” But while it ’s for certain something of a fiscal raving mad west out there – albeit a wild Dame Rebecca West dwell bybored apesandlibertarian incubus ships – crypto partisan will usually say that such word form are at best exaggeration .
Sometimes , though , the people squall crypto schemes “ scams ” are bang on . Just ask Tong Zou : he lost half a million Canadian dollar sign – his entire liveliness savings – in what investigatorslater called“an old - fashioned fraud wrapped in innovative engineering . ”
“ It just makes me more depressed about it , ” he toldSky News . “ I could have invested it in real estate . I could have put it in stocks .
“ So far , nothing ’s been found . It sucks . ”
But how did Zou , along with tens of thousands of other crypto investor , lose such a gargantuan sum ?
It all begin about three year ago , when Gerald Cotten wasreported deadat years 30 from complications with Crohn ’s disease . Cotten was the co - founder and CEO of QuadrigaCX , the big cryptocurrency interchange company in Canada , andaccording to his widow , he admit “ solitary province for handle the fund and coin ” on the interchange .
With the selective information postulate to get to the financial databases stash away on a laptop protected by password known only to Cotten , QuadrigaCX was coerce to admit that the crypto savings total more than C$ 200 million had been lost , perchance forever .
So far , so unlucky . But in the month following Cotten ’s death and QuadrigaCX ’s subsequent bankruptcy , the Ontario Securities Commission ( OSC ) – as well as an army of anonymous Twitter , Reddit , Pastebin , and Telegram story – started dig into the case .
What they recover wasnothing shortof shammer on a monolithic scale .
Cotten “ launch the business as he realize primed , with no proper system of internal superintendence or controls or proper books and disc , ” theOSC ’s reportrevealed back in 2020 , and “ did not file [ QuadrigaCX ] with any securities regulator .
“ This lack of enrollment facilitated Cotten ’s ability to commit a large - scale put-on without spotting . So did the absence seizure of inner lapse over Cotten , ” they explained .
In fact , despite being a cozenage that could seemingly only take place in the twenty-first century , QuadrigaCX turn out to be nothing more than a good previous - fashioned Ponzi scheme : Cotten had been taking money from new investors and using it to pay off one-time investor – all the while taking a sizeable ( and misappropriated ) skip for himself to fund his lavish modus vivendi .
But that was n’t all . As ahead of time as 2015 , Cotten was also creatingdozens of simulated accountsto stimulate trading on his program – fake account that were take with phoney crypto . By the time he died , these accounting – some of which were named things like Aretwo Deetwo and Seethree Peaohh – had made hundreds of thou of trade , sell their fake Bitcoin for veridical currency .
“ I kept necessitate them : Where ’s my money ? - October , November , December – during all that clip , ” Zou told Sky News . “ They keep saying it was the case … I just prayed . I really prayed it was n’t a scam . ”
“ At that fourth dimension , there was nothing I could do . There was no way of getting my money back , ” he added . “ Once I deposited it , it was basically gone . ”
And then , amidmounting legal troublesand customer complaint of pretermit or inaccessible funds , Cotten died .
But there ’s another twist in the tale . Because oddly – suspiciously , perhaps – dying might have been the in effect thing that could have happen to him .
See , if Cotten were alive , he would be in big hassle decent now . harmonise to OSC calculations , he owed a totality of around C$ 215 million , only a fifth of which has so far been recover .
“ Under normal circumstance , these finding would probably have led to an enforcement action against Cotten and/or Quadriga , ” the agency compose in its composition . “ However , this is not practical afford that Cotten is expire and Quadriga is bankrupt , with its plus open to a court - manage distribution process . ”
And that ’s why – despite affidavit from Cotten ’s widow woman , the hospital where he snuff it , and the funeral nursing home that prepared his body for burial – some hoi polloi think the crypto conman might still be out there .
“ They [ the FBI and RCMP ] asked me about 20 times if he was alive , ” one witness who has intimate knowledge of Quadriga ’s workings toldVanity Fair . “ They always end our conversations with that doubtfulness . ”
Meanwhile a Quadriga creditor and cryptocurrency expert exit by the handle QCXINT separate the clip that Jennifer Vander Veer , the spark advance investigator in the FBI ’s cybercrime division , had severalise him that the trueness of Cotten ’s decease is “ an open question . ”
If the authorities are bamboozle by the case , so too are those who consider themselves Cotten ’s friends and colleagues . He was “ not an vicious dude , ” Freddie Heartline , a beginner of the Bitcoin Co - op , told Vanity Fair ; “ like a shaft of light of sun , ” according to longtime associate degree Michael Patryn ( Patryn wouldlaterbeoutedas convicted thief and fraudster Omar Dhanani by Redditors and journalist . ) Even his wife account feeling “ upset and disappointed ” when she learned of Cotten ’s “ wrong ” business drill .
Was it any curiosity , then , that so many investors were drawn in by Cotten ’s scheme ?
“ A lot of hoi polloi want to blame just me for this , ” Zou told Sky News . “ Yeah I merit some of the incrimination because it ’s irresponsible . I should have done more research … [ but ] How could I know ? ”
“ I did some enquiry on Reddit . They say : ‘ Oh it ’s going to take a while but you always get your money . It ’s not a scam ’ , ” he say .
“ I guess I trusted [ Quadriga ] a lot … It turn out to be a scam . ”
