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Gerald Cotten built one of Canada’s biggest cryptocurrency exchanges, but its collapse has left $250-million of investors’ funds in limbo. The mystery of Quadriga stretches from Vancouver and Toronto to a trailer park in suburban Saint John, N.B. Joe Castaldo, Alexandra Posadzki, Jessica Leeder and Lindsay Jones report

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The registered office of 700964 NB Inc. is a rundown, vinyl-sided trailer in rural New Brunswick. Most of the mobile homes here in a community in Quispamsis, a suburb of Saint John overlooking the tail end of the Appalachian Mountains, are tidy abodes with affable residents. A slim young man with scruff on his face sits on the porch and drags from a cigarette, next to a bowl nearly overflowing with butts. A security camera mounted on the wall points at the front door, red light glowing.

This home is one of the few physical traces of Quadriga Fintech Solutions Corp., which operated a virtual exchange known as QuadrigaCX that allowed people to buy and sell cryptocurrencies such as bitcoin. Registered in New Brunswick in February, 2018, 700964 NB is part of a network of entities that helped move millions of dollars around so Quadriga could take deposits and facilitate withdrawals, sometimes in the form of physical bank drafts, for its clients.

The unusual way it conducted business has now been painfully exposed for all 115,000 of its users. The company was granted creditor protection on Tuesday in the Supreme Court of Nova Scotia after its founder, Gerald Cotten, died suddenly at the age of 30. Mr. Cotten left behind a company in shambles. Quadriga’s users, unable to withdraw their funds, are collectively owed $250-million.

Nobody knows where to find $180-million worth of cryptocurrency. Only Mr. Cotten, it seems, knew how to access it. The bulk of rest of the money is stuck in limbo, either in the form of bank drafts that financial institutions have refused to cash or held by numbered companies and payment processors. Ernst & Young Inc., the court-appointed monitor, will oversee the lengthy process of tracking down the funds, including the millions in missing cryptocurrency, and returning them to Quadriga’s outraged users. Some are owed small sums; others have tens of thousands with the exchange. One account contained a balance of $70-million.

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The registered office of 700964 NB Inc. is a trailer in Quispamsis, a suburb of Saint John, N.B. This home is one of the few physical traces of Quadriga Fintech Solutions Corp.Scott Munn/The Globe and Mail

Quadriga wasn’t so much a company as a one-man show. Mr. Cotten ran the firm mostly from his laptop, wherever he happened to be. During the final months of his life that was usually the home he shared with his wife, Jennifer Robertson, in Nova Scotia, according to court documents. Quadriga had no physical office, no corporate bank accounts or even an accounting department. Mr. Cotten employed only a small team of contractors. Cryptocurrency exchanges in Canada are not regulated. No one was watching over the company.

The huge amount of missing cryptocurrency, the sudden nature of Mr. Cotten’s death (the company said he died while travelling in India due to complications from Crohn’s disease) and the fact he signed a will less than two weeks before he died have led to rampant speculation that he may not actually be dead. Ms. Robertson has received threats to her safety, as has Quadriga’s director of operations, Aaron Matthews, according to her affidavit.

Mr. Matthews is listed as the owner of 700964 NB along with Sarah-Lynn Matthews, according to its business registration. But at the mobile-home park, the man on the porch tells a Globe and Mail reporter that no one by that name lives there. He begrudgingly says his name is Jim. A short time later, he declines to answer any other questions. Visibly shaking, he demands a reporter and a photographer leave the property. A person with knowledge of the leasing arrangements in the park says Aaron and Sarah-Lynn Matthews do, in fact, rent the property. A neighbour says Ms. Matthews lives there and that UPS and Purolator trucks occasionally stop by to deliver small packages to the home.

Later in the day, as a Globe reporter takes a photo of the home, a woman in a baseball cap charges out the front door, yelling profanity-laced threats from the porch.

Not since the Bre-X Minerals scandal, the infamous stock swindle of the 1990s, has the Canadian business community seen a company come unravelled so quickly after one man’s death. But perhaps the bigger mystery is why anyone trusted Quadriga in the first place.

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Mr. Cotten and his wife Jennifer Robertson lived in Fall River, N.S., a bedroom community just outside Halifax. Their home had a "Sold" sign on the front lawn on Feb. 6, 2019.Darren Calabrese/The Globe and Mail

Quadriga was the brainchild of Gerald Cotten, a boyish-looking entrepreneur with a shock of sandy hair and an easy smile. He grew up in Belleville, Ont., and earned a bachelor of business administration from the Schulich School of Business at Toronto’s York University in 2010. He was drawn to intellectual, if nerdy, interests. An avid player of Settlers of Catan, a strategy board game, he regularly met up with a group for sessions at a friend’s home.

As bitcoin gained prominence in the years after his graduation, he became a fixture in Toronto’s burgeoning cryptocurrency scene. In 2013, devotees met up at a small downtown bar called the Charlotte Room, before the event moved to the Decentral co-working space the following year. People who ran into him described him as friendly and charismatic, quick to lend a few bucks to a friend in need.

He spent time in Vancouver, too, and became a director of the Bitcoin Co-Op, an organization that promoted the use of cryptocurrency. Michael Yeung, another director, recalled Mr. Cotten as neither a naive idealist about bitcoin nor someone out to make a quick buck. “My sense is he was a bit of both – and he was in it for the long haul,” Mr. Yeung said. Andrew Wagner, also a director at the co-op, described him as “very friendly, very smiley.” He was, however, a private individual who kept his circle of friends small.

He did have an adventurous streak – Mr. Cotten acquired his pilot’s licence and an airplane and was working toward getting a helicopter licence at one point – but he balanced it with prudence. Michael Perklin, a friend in the cryptocurrency industry, said Mr. Cotten carefully avoided gluten when they went for lunch and made sure to bring cider on board game night instead of beer, owing to digestive issues. At the time, Mr. Cotten told friends he had celiac disease.

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Quadriga was the brainchild of Gerald Cotten, who grew up in Belleville, Ont., and earned a bachelor of business administration from the Schulich School of Business at Toronto’s York University in 2010.

Mr. Cotten founded Quadriga in 2013, making it one of the first Canadian cryptocurrency exchanges. He partnered with another regular in the bitcoin scene, Michael Patryn, and registered the company in British Columbia. While Quadriga had offices in Vancouver and Toronto and four employees by 2015, profitability was elusive. According to a prospectus filed that year during a botched attempt to go public, the trading platform took in a meagre $22,168 in revenue during the three-month period ended Jan. 31, 2015. Its net loss for the period was almost $90,000.

But the company saw raising money to list on the Canadian Securities Exchange (CSE) as a way to help it grow. That’s where Mr. Patryn came in. In addition to being a co-founder and a shareholder, he had a consulting contract with Quadriga and advised the company on the effort to list. As word spread of the initiative, he was approached by a Vancouver businessman named Robert Lawrence, who offered to help recruit investors and take the company public, according to a lawsuit Mr. Patryn later filed against Mr. Lawrence.

In Mr. Patryn’s telling, Mr. Lawrence failed to perform his duties properly and the company was never able to list. Mr. Lawrence raised a total of $850,000, of which $150,000 came from Mr. Patryn. But by June, 2015, the company had run out of money and lost 45 per cent of its market share, according to Mr. Patryn’s statement of claim. Mr. Patryn said much of the money had to be spent correcting the “poor quality” of Mr. Lawrence’s work. Investors pitched in another $600,000, including $200,000 from Mr. Patryn, to keep the company from failing.

By February, 2016, Quadriga gave up on its plans to list and severed its relationship with Mr. Patryn, he said in court documents, owing to his perceived association with Mr. Lawrence. “News of his termination from QCX has materially and negatively affected his ability to secure similar work in the financial technology industry," Mr. Patryn’s statement of claim read.

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Mr. Cotten at Bitcoin House in Paris in 2014.Facebook/Quadriga CX

In a response, Mr. Lawrence denied the allegations and said Mr. Patryn approached him, not the other way around. Moreover, Quadriga’s failure was its own fault – and Mr. Patryn was the company’s “controlling mind,” he asserted. (Mr. Cotten is scarcely mentioned in the lawsuit.) Mr. Lawrence sought to have it dismissed. No filings have been made in the case since 2016. Mr. Lawrence could not be reached for comment.

In an e-mail this week, Mr. Patryn defended his time at Quadriga.

“We were, at that time, a leader in many ways and operated responsibly and with a level of transparency that is unheard of even today. … I left the company over three years ago over a fundamental disagreement with Gerry regarding his decision to halt the listing process.” The relationship was strained, but they remained friends, he said. Mr. Patryn added he hasn’t had any involvement in Quadriga’s management or operations since then.

This past October, however, The Globe received an e-mail pitch from an “executive concierge” company called the Windsor Group offering up Mr. Patryn for interviews to discuss virtual currencies and describing him as a Quadriga director. Mr. Patryn said he doesn’t know what the Windsor Group is, nor has he authorized anyone to pitch him as a Quadriga director, as he never served on the board.

Shortly after Quadriga pulled the plug on the listing in early 2016, its chief financial officer resigned, along with two board members, leaving just Mr. Cotten to steer the company. (The British Columbia Securities Commission also issued a cease trade order on the private company.) Mr. Patryn remains a shareholder, with a 17.4-per-cent stake through a company called Crypto Consulting Group, registered in Hong Kong. His partner, Lovie Horner, owns another 10.3 per cent. Ms. Horner works as a designer for a dog apparel company, according to her LinkedIn profile, which is no longer online. Mr. Cotten owned the largest chunk at 41.2 per cent.

Mr. Patryn now runs a company called Fintech Ventures Group, which calls itself Canada’s first incubator for blockchain startups. Searching for the name Michael Patryn turns up a few articles that talk up his business expertise and physical prowess. An article on a website called Young Upstarts calls him a “go-to spokesperson on fintech” and says he did a stint as an MMA fighter. His own website says he’s also a personal trainer who teaches Thai kickboxing and blade combat. His website also says he graduated with a master’s degree in social psychology from the University of California, Santa Barbara. (A spokesperson from the school says the registrar’s office has no record of a student with that name, "nor has such a program ever existed.”)

Last year, Mr. Patryn hired a Toronto-based company called Ltd. to “remove negative content referencing him on a particular website,” according to a lawsuit he filed against the firm in Toronto small claims court in November. offers services to bury unflattering search results while creating and promoting positive material. Mr. Patryn agreed to pay $3,500 per month in July, 2018, for the company’s personal suppression, guaranteed removal and reputation maintenance service, according to court documents. He told his problem was a post on a website called Complaints Board, which is no longer online. also pointed out to Mr. Patryn posts on Reddit from users claiming that a Mr. Patryn, co-founder of Quadriga, is a “fraudster” named Omar Dhanani.

The two parties got into a dispute about costs, and Mr. Patryn sued, claiming did not remove content within the promised timeline. He is seeking the return of $10,500 and said he is “suffering continued reputation harm.”

The company acknowledged providing services to him. “Mr. Patryn approached for assistance in removing online records relating to criminal charges and convictions as against him, including money laundering and theft,” according to the company’s court filing. “Specifically, a number of complaints were made as against Mr. Patryn and his aliases ‘Omar Dhanani’ and ‘Omar Patryn,’” the filing says, referring to posts on the Complaints Board website.

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A yacht owned by Mr. Cotten.Sunnybrook Yachts claimed it never guaranteed a timeline and said it created 10 separate websites, articles or profiles with positive material on Mr. Patryn. claimed the Reddit article was pushed off the first page of Google search results, thanks to four separate websites it created. Mr. Patryn stopped paying three months into the five-month term, the company alleged, and it is seeking the balance of $7,000.

Mr. Patryn disputed the allegations in a December court filing, denying “each and every allegation” contained in’s claim.

In an e-mail to The Globe this week, Mr. Patryn said he is not Mr. Dhanani.

The court file includes a letter, dated Jan. 25, from Mr. Patryn’s lawyer, Samuel Osei, requesting that the names Omar Patryn and Omar Dhanani be struck from the court file. “Your unnecessary inclusion of those names in the pleadings as aliases is not only incorrect, but is also inflammatory of our client,” Mr. Osei writes.

There is, in fact, an Omar Dhanani who spent 18 months in a federal prison in the United States. In 2004, prosecutors from the United States Attorney’s office for the District of New Jersey charged Mr. Dhanani, who was living in California at the time, for his role in an online identity theft ring known as the Shadowcrew, U.S. court records show. Mr. Dhanani, who also used the name Omar Patryn, took a deal and pleaded guilty in 2005 to one count of conspiracy to transfer identification documents. Mr. Dhanani, who was born in 1983, was released in 2007. By 2009, according to a court document, he had been deported to Canada.

Bitcoin has always been volatile, but at the start of 2017, with Mr. Cotten running Quadriga largely on his own, the price of bitcoin exploded. From January to December, the price skyrocketed almost 3,000 per cent to US$18,674 as cryptocurrecy became the latest speculative frenzy.

That was good news for Quadriga. In its early days, Quadriga was small – an analysis of data housed by CBIX, a Canadian bitcoin index owned by cryptocurrency exchange, shows that $7.4-million worth of bitcoin traded hands on the platform in 2014.

But in 2017 an astonishing $1.2-billion worth of bitcoin was traded through Quadriga, according to a data analysis conducted by The Globe. Quadriga took a commission on every trade.

But the bitcoin bubble created new problems for Mr. Cotten. Quadriga did not have any corporate bank accounts to handle customer funds. (The mainstream financial industry has been cautious about providing services to the cryptocurrency industry, in part because of concerns about money laundering.) Instead, it established a network of third-party payment processors to open accounts with banks to facilitate transactions. Mr. Cotten’s friend Mr. Perklin said his father, a Quadriga user, was told to wire $10,000 to a bank in Poland last fall. Mr. Perklin fired off an e-mail to Mr. Cotten to check if the instructions were legit. Mr. Cotten assured him they were. The deposit was never properly credited to the account, however, and Mr. Perklin’s father was still trying to sort it out when Quadriga suspended operations last month.

Mr. Cotten’s patchwork payment system ran into a serious problem with the Canadian Imperial Bank of Commerce as the price of bitcoin peaked. In December, 2017, millions of dollars starting pouring into CIBC bank accounts belonging to Quadriga payment processors. In less than three months, hundreds of Quadriga users deposited $67.1-million as they scrambled to cash in on the bitcoin craze.

The bank noticed the sudden influx of cash and, in January, 2018, froze more than $25-million held in accounts that belonged to Costodian Inc., one of Quadriga’s payment processors, and its owner, Jose Reyes. In Ontario court filings, CIBC said it froze the accounts because it couldn’t determine who owned the funds – Quadriga, Costodian or the 388 people who deposited money into the accounts to buy cryptocurrency. The bank also received wire recalls from a number of depositors. Quadriga fired back that the majority of the money belonged to the company – and that CIBC was wrong to freeze it.

The court documents shed some light on Quadriga’s inner workings. Users first sent money to Costodian’s accounts. In exchange, their accounts were credited with QuadrigaCX Bucks, which could only be used to buy cryptocurrency on the platform. CIBC tried to verify that all of the Quadriga user accounts had been properly credited with QuadrigaCX Bucks, but the exchange refused to co-operate, according to court documents.

Customers, meanwhile, started to experience significant delays in trying to withdraw funds. In an e-mail to The Globe last fall, Mr. Cotten blamed the legal skirmish for the lengthy withdrawal time, as some users reported waiting months to cash out. He was vocal about the company’s banking issues – frustrated by the reluctance of major firms to deal with cryptocurrency. Even some of his personal accounts and those of his family members had been shut down by major banks because of his association with cryptocurrency, he told The Globe.

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Mohamed Lamine Chabane, a Quadriga investor, in Montreal on Feb. 8, 2019.Francois Ollivier/The Globe and Mail

"The number of individuals in the Bitcoin community that have been shut out of the banking system is staggering," he wrote.

The Quadriga page on Reddit, meanwhile, churned with grievances from angry customers, but people still used the platform, saying Quadriga offered the most attractive bitcoin price. Sellers looking to liquidate their bitcoins would get more Canadian dollars in return if they used Quadriga to broker the sale, while buyers could snap up cryptocurrency at cheaper rates. This created a significant arbitrage opportunity for savvy traders.

In the end, the court took possession of the funds and released them back to Costodian via bank drafts, but neither the company nor Quadriga could find a bank to process them.

Amid the turmoil, Mr. Cotten was settling into a seemingly quiet life in Fall River, N.S., a bedroom community just outside Halifax. He legally married Ms. Robertson on June 8, according to the marriage certificate. They shared a modest two-storey house. clad in cherry-coloured siding, in a relatively new development that offers residents plenty of privacy and space. The house had a “Sold” sign on the lawn this week.

Mr. Cotten also owned an airplane and a 51-foot sailboat, outfitted with three cabins, named The Gulliver. (The boat was listed for sale last week on a site operated by Sunnybrook Yachts for US$459,000, but the posting has since been removed.) His wife operated a property management firm, which accumulated about a dozen properties in and around Halifax between November, 2017, and April, 2018. The portfolio, most of which consists of residential homes, is worth about $6-million.

Mr. Cotten seemed to drop out of touch with friends from the Toronto and Vancouver cryptocurrency communities. Many were surprised to hear he had gotten married, much less was living in Fall River. Mr. Perklin said he’d never heard Mr. Cotten mention Ms. Robertson. He didn’t make himself known in the Halifax bitcoin scene, either. Billy Garrison, a Halifax-based blockchain enthusiast who runs a local group, said he never crossed paths with Mr. Cotten or even heard mention of him. “I was quite surprised to find out that they were actually based out of Nova Scotia," he said of Quadriga.

Meanwhile, the price of bitcoin peaked in mid-December, 2017 and plummeted throughout 2018, taking other cryptocurrencies with it. (Bitcoin is down 82 per cent from its high.) The price crash caused panic, especially among retail investors, who scrambled to get their money out. Quadriga, however, was still unable to properly facilitate withdrawals. One user named Yi Sun sued the company in B.C. in October, 2018. He alleged Quadriga “failed and refused” to pay him $137,379.40 when he attempted to cash out. Quadriga never filed a response, and even though the court ordered the company to pay, it still hasn’t done so, according to court filings.

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Maurice Chiasson, a lawyer with Stewart McKelvey, represented Quadriga at Nova Scotia Supreme Court in Halifax on Feb. 5, 2019.Andrew Vaughan/The Canadian Press

Amid the turmoil, Mr. Cotten took a trip to India late last year to open an orphanage, according to a statement put out by Quadriga. A photo has since circulated online of a building with a sign labelling it the “Jennifer Robertson & Gerald Cotten Home" along with the date December, 2018. The building is in Venkatapuram, according to the sign, and carries the logo of a U.S. non-profit called Angel House. The non-profit did not respond to multiple e-mails and phone calls about the photo.

On Jan. 14, Quadriga posted a statement to its website saying Mr. Cotten had died on Dec. 9. “Gerry cared deeply about honesty and transparency – values he lived by in both his professional and personal life,” the statement read. “He was hardworking and passionate, with an unwavering commitment to his customers, employees, and family.”

The news fuelled speculation online about his death, especially given Quadriga customers were still facing delays getting withdrawals. There is a death registration for Mr. Cotten in a database maintained by the Government of Rajasthan, listing his place of death as the Fortis Escorts Hospital in Jaipur on Dec. 9. (The registration spells his last name “Cottan.”)

Asked about Mr. Cotten this week, a spokesperson for the hospital said “the patient” was brought to the facility in critical condition the night of Dec. 8. He was suffering from septic shock, perforation peritonitis and intestinal obstruction. The following day, he suffered cardiac arrest, but was revived. His condition worsened, and he went into cardiac arrest a second time the following day. At 7:26 p.m., he was declared dead.

After Mr. Cotten’s death, the daunting task of untangling Quadriga was left to Ms. Robertson, who was the sole beneficiary and executor of his estate. She called a meeting of shareholders – Mr. Patryn and Ms. Horner – in January to appoint new board members since there effectively was no board any more. Ms. Robertson’s stepfather Thomas Beazley and a man named Jack Martel were appointed, and the board decided to suspend Quadriga’s operations. The company filed for creditor protection in Nova Scotia on Jan 31.

Ms. Robertson, along with Mr. Matthews, began an extensive search for Quadriga’s crucial corporate information, according to court documents. Like most exchanges, Quadriga kept its cryptocurrency assets in “cold wallets,” an offline storage method that’s designed to protect against hackers. Accessing a cold wallet requires a password (sometimes more than one) and nobody knew where Mr. Cotten stored the information. Ms. Robertson scoured their home in Fall River, along with other properties, but came up empty. She even retained a retired RCMP specialist to hack into Mr. Cotten’s encrypted laptop, but he failed. Ernst & Young, Quadriga’s monitor, estimates at least $180-million in cryptocurrency is locked away somewhere. “Quadriga was unable to access the cold wallets and/or discovered that the cold wallets contained minimal cryptocurrency units,” Ernst & Young said in a report submitted in court.

People who knew Mr. Cotten are shocked that he didn’t prepare for something like this. “It is not consistent with Gerry’s personality,” said his friend Mr. Perklin. “He was a very good planner.” Indeed, Mr. Cotten drafted a will and signed it 12 days before his death. While he named Ms. Robertson his sole beneficiary, he went one step further to also outline the distribution of his assets should she not survive him. He specified his pet chihuahuas Nitro and Gully, or any successor dog, were to go to his father-in-law, along with $100,000 for their care.

Mr. Perklin recommended Quadriga to his father, brother and his sister on that very basis. “I knew the CEO and knew that when anything went wrong, I at least had someone I could call,” he said. The entire family is now among Quadriga’s creditors.

If there is any hope to recover the funds, it will come out in court. A judge granted Ernst & Young Mr. Cotten’s encrypted laptop, along with a USB key. At Quadriga’s creditor protection hearing on Feb. 5, lawyers representing the company discussed whether it was safe to transport the laptop between Toronto and Halifax. It could, after all, hold clues to the whereabouts of a huge sum of money belonging to thousands of users.

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A sold sign is seen on an undeveloped lot owned by Gerald Cotten and his widow Jennifer Robertson in Fall River, N.S. on Feb. 6, 2019.Darren Calabrese/The Globe and Mail

Some of the details in court filings suggest tracing the funds and returning it to users will be a long, difficult process. Court documents say an “organization” identified as WB21, which acted like a payment processor, is holding millions of dollars belonging to Quadriga and had refused to release the funds or even respond to communications from the company. There’s also a photo submitted in the court record of an unspecified number of bank drafts held by Mr. Matthews in his role as owner of 700964 NB Five piles of bank drafts are stacked on top of a stove, illuminated by a candle. A lawyer for Quadriga said in court the bank drafts are no longer on the stove.

Little is known about Mr. Matthews, whom Ms. Robertson recommended be appointed interim CEO. Ms. Robertson did not respond to an interview request this week.

Mohamed Lamine Chabane opened a Quadriga account in 2017, during the height of the bitcoin boom. Mr. Chabane, who lives in Montreal, chose it because it serviced Canadians. (Large U.S. exchanges don’t allow Canadian residents to withdraw funds.) The user experience was easy, and he’d heard lots of people online talk about Quadriga. He made three withdrawals last year, and while the process was slow, he eventually got his money.

In December, as online users grew even more restless about delays, he tried to withdraw $7,000 from his account, followed by $12,000 in January. The funds never came through. “I must be strong for my family,” said the father of four, who was planning to use the money as part of his retirement. He’s still mystified at Quadriga’s undoing. He’s been following the court proceedings, and he thinks it’s unlikely he can recoup more than 10 per cent of what he’s owed.

“I don’t know how the biggest exchange in Canada didn’t have any structure."

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