QuadrigaCX founder used clients’ funds for private ends

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The founder and CEO of now defunct QuadrigaCX Gerald Cotton used clients’ funds for private ends, reported the firm’s bankruptcy trustee Ernst & Young Inc. More specifically, Cotton, who died in mysterious circumstances last year, used customers’ funds to trade for his own account on other cryptocurrency exchanges.

QuadrigaCX, which was Canada's biggest cryptocurrency exchange, ceased operations this year. The company filed for protection from creditors in January, and was declared bankrupt in mid-April, owing customers $190 million worth of cryptocurrency and fiat.

“Significant volumes of cryptocurrency were transferred off platform outside Quadriga to competitor exchanges into personal accounts controlled by Mr. Cotten,” Ernst & Young Ernst and Young outlined outlined in the report. “It appears that User Cryptocurrency was traded on these exchanges and in some circumstances used as security for a margin trading account established by Mr. Cotten.”

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