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Old 06-11-2020, 02:36 PM   #624
chemgear
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https://www.cbc.ca/news/business/osc...tten-1.5607990

The Quadriga cryptocurrency exchange that saw millions of dollars disappear just as its founder died was a "fraud" and Ponzi scheme, according to the Ontario Securities Commission.

The regulator said Thursday that Vancouver-based Quadriga's late founder Gerald Cotten committed fraud by opening accounts under aliases and crediting himself with fictitious currency and crypto asset balances, which he traded with unsuspecting clients.

The OSC spent 10 months analyzing trading and blockchain data, interviewing key witnesses, collaborating with overseas regulatory bodies and using third-party and bank information to reconstruct what was going on at Quadriga in the months leading up to 30-year-old Cotten's death.

On Thursday, the OSC attributed about $115 million of the $169 million clients lost to Cotten's "fraudulent" trading.

Another $28 million was lost when Cotten used client assets on three external crypto asset trading platforms without authorization or disclosure.

The OSC said he also misappropriated millions in client assets to fund his "lavish" lifestyle and because he was in sole control of the company ever since 2016, he "ran the business as he saw fit, with no proper system of internal oversight or controls or proper books and records."

By the time the OSC started investigating, over 76,000 clients — about 40 per cent of them Ontarians — were owed a combined $215 million.

"OSC Staff would likely have pursued an enforcement action against Cotten and Quadriga," the agency wrote in its report.

"However, this is not practical given that Cotten is deceased and Quadriga is bankrupt, with its assets subject to a court-supervised distribution process."
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