Kraken CEO Jesse Powell Gives Five Reasons Why the QuadrigaCX is a Strange Case
We have heard in January and February how users of the cryptocurrency exchange QuadrigaCX have been affected after the death of the owner of the crypto exchange, Gerald Cotten.
The owner of the platform was the only one in control of the private keys of the wallets used by the exchange. Until now, it was not possible for experts and blockchain analyst to determine where are the funds or how to recover them. Due to this situation, investors lost several millions of dollars in virtual currencies.
The first thing that called his attention is the fact that there is just one developer maintaining the entire cryptocurrency exchange. As per court documents, there was only one developer working at QuadrigaCX, Alex Hanin. He was responsible for all the issues related to the exchange.
According to Powell, Kraken has more than 100 developers that are working on the exchange, trying to improve its services and making it better over time. The main question is related to how this individual alone was able to perform the work of so many individuals.
Clearly, this is also a problem. If there is just an individual working on the platform, if it “gets hit by a bus,” the whole exchange is down. Powell also mentioned that exchanges tend to make backups on real-time rather than once per hour as this developer did.
The second thing that he mentions is hat QuadrigaCX could just have run out of money. The exchange platform did not have a clear accounting of funds. Other exchanges such as Kraken or Coinbase have been having a look at the transactions and discovered that the exchange lost a lot of money in 2017.
Brian Armstrong, the CEO of Coinbase, said that the exchange experienced a multimillion-dollar bug related to an Ethereum smart contract. Due to this situation, the platform could have been trying to trade in the market and recover the funds lost.
Powell is also suspicious about the timing of the death of Cotten. Cotten suffered from Crohn’s Disease and died of a heart attack when he was travelling around India. Nevertheless, he made a will leaving $9 million in assets to his wife, Jennifer Robertson. As per Powell, the death seems suspicious and it was “conveniently timed.”
Due to the fact that the news about his death was not shared for a month, this makes the things much more suspicious than before.
Another thing that raised concerns among the crypto community is the involvement of Michael Patryn, the co-founder of the exchange. Some individuals suggested that he could be Omar Dhanani, a convicted fraudster.
“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,” commented Powell.
Patryn has also not been working on the exchange for over three years. After rumours spread about this situation, several individuals started to separate themselves from the issue.
Finally, could the exchange be part of a money laundering scheme? As per Decrypt, Dahani has been engaged in several acts of money laundering, and he was convicted for stealing credit card data. Powell says that if Dhanani was involved in QuadrigaCX, that could mean that he was running a similar scheme to launder money.
QuadrigaCX lost more than $150 million in virtual and fiat currencies. Users are still waiting to recover their funds after a few months without information about the platform and the future of their funds.
There have been several hacks to exchanges that lost part of their users’ funds. Due to this situation, crypto experts and analysts suggest users holding their virtual currencies in cold storage wallets.
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