Lawyers representing the users of a bankrupt cryptocurrency exchange are asking the RCMP to exhume the body of the fund’s founder and conduct an autopsy, in order to determine whether he is, in fact, dead.
A letter dated Dec. 13, 2019, and posted on the website of law firm Miller Thomson, says that as representatives of the QuadrigaCX clients, they are asking to exhume the body due to the “questionable circumstances surrounding” Gerald Cotten’s death.
QuadrigaCX, which once called itself Canada’s largest cryptocurrency exchange, imploded after Cotten’s death from complications of Crohn’s disease during a trip to India in December 2018.
Cotten, who ran the exchange from his home outside of Halifax, was the company’s CEO and sole director. He was the only one who had access to the so-called cold wallets that were supposed to hold his customers’ cryptocurrency.
More than 76,000 unsecured creditors, virtually all of them QuadrigaCX clients, came forward to claim they are owed $214.6 million — $74.1 million in cash and $140.5 million in cryptocurrency.
The company began bankruptcy proceedings in Nova Scotia in April.
The significant losses by those clients are another reason Miller Thomson is campaigning to exhume Cotten’s remains, according to the letter.
The lawyers say they would like their request to be resolved by spring, 2020, as they have concerns over the decomposition of Cotten’s remains.
Get weekly money news
In a emailed statement shared with the Canadian Press, Richard Niedermayer, lawyer for Cotten’s widow Jennifer Robertson, said she is “heartbroken” to learn of the exhumation request.
“Gerry died on Dec. 9, 2018 in India,” the statement says.
“It is not clear how the exhumation or an autopsy to confirm the cause of Gerry’s death from complications arising from his Crohn’s disease would assist the asset recovery process further.”
The bankruptcy proceedings were moved to Toronto earlier this year.
Ernst & Young, the accounting firm investigating the fund’s implosion, asked for a change in the jurisdiction in order to accommodate the number of court appearances.
“As the majority of the professionals are located in Ontario, there would be significant cost savings to transferring the proceedings to Ontario,” said the company, which was acting as QuadrigaCX’s bankruptcy trustee.
“There are very few remaining ties to Nova Scotia at this time.”
Court filings have revealed that of the QuadrigaCX users who lost money, 39 per cent were based in Ontario, 19 per cent were in British Columbia and 14 per cent were in Quebec.
Only 1.4 per cent lived in Nova Scotia.
A report by Ernst & Young found that Cotten moved customers’ money into his own personal accounts, likely traded fake currency deposits for real cryptocurrency and inflated revenue figures.
Ernst & Young were able to recoup $32 million in cash and either recovered or located $1 million in cryptocurrency as part of the bankruptcy process.
Another $12 million in property purchased by Cotten and his widow, Jennifer Robertson, is subject to an asset preservation order.
The couple, who did not have material sources of income other than funds from Quadriga, purchased a number of assets over the last few years, including 16 properties in Nova Scotia, a private jet, luxury vehicles and a personal sailing vessel.
Robertson has agreed to disclose all assets and not to sell or dispose of any property subject to the preservation order without the consent of Ernst & Young.
Cotten reportedly did not file personal tax returns for 2014, 2015 or 2017, according to the report. When he did file taxes, he did not claim income from Quadriga.
The company did not prepare or file corporate tax reports with the Canada Revenue Agency, nor did it submit HST filings.
Both the FBI and the RCMP have previously confirmed they are investigating the downfall of QuadrigaCX.
— With files from Erica Alini and The Canadian Press
Comments