QuadrigaCX co-founder transferred user funds into personal accounts: EY

Gerald Cotten, the now-deceased co-founder of collapsed Canadian cryptocurrency exchange QuadrigaCX, transferred user funds into his personal accounts, according to a new report.

QuadrigaCX’s court-appointed monitor and trustee EY published the fifth report on Wednesday, stating that “significant volumes” of user cryptocurrency were transferred off QuadrigaCX to other competitor exchanges into personal accounts controlled by Cotten.

Those funds were then traded on competitor exchanges and in some cases used as security for a margin trading account set up by Cotten, EY said.

The report further stated that QuadrigaCX’s operating infrastructure was “significantly flawed from a financial reporting and operational control perspective.”


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There were also no accounting records, no segregation of assets between QuadrigaCX funds and user funds, and no visibility into profitability, per the report. 

QuadrigaCX collapsed earlier this year, following Cotten's sudden death last December. Cotten was the only person who had the password to access the missing C$260 million stored in offline cold wallets.

EY, in its last report published in May, said that QuadrigaCX has only $21 million in assets, but owes creditors $160 million.

Earlier this month, the Federal Bureau of Investigation also started an investigation into QuadrigaCX, seeking information from victims as to whether they have ever withdrawn fiat currencies from the exchange and used U.S. based bank accounts to conduct any transactions.

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Yogita Khatri is a senior reporter at The Block, covering all things crypto. As one of the earliest team members, Yogita has played a pivotal role in breaking numerous stories, exclusives and scoops. With nearly 3,000 articles under her belt, Yogita holds the records as The Block's most-published and most-read author of all time. Prior to joining The Block, Yogita worked at crypto publication CoinDesk and The Economic Times, where she wrote on personal finance. To contact her, email: [email protected]. For her latest work, follow her on X @Yogita_Khatri5.