Ontario securities regulator publishes investigative report on crypto exchange QuadrigaCX

The Ontario Securities Commission has published the findings of its investigation into the collapse of QuadrigaCX, the now-defunct crypto exchange in Canada.

Investigators cited the exchange's collapse and subsequent bankruptcy to fraudulent activities on the part of its CEO and co-founder, Gerald Cotten. The OSC first said it would investigate QuadrigaCX after the exchange's failure led to losses of at least $169 million spread among tens of thousands of customers. According to the OSC's statement, about 40% of these investors were Ontarians. 

After analyzing platform data gleaned from more than 368,000 client accounts and reconstructing Quadriga's financial history using records from third parties, the staff reported Cotten opened accounts under aliases with fake balances and traded with Quadriga clients.

When crypto asset prices changed and clients withdrew, the OSC found that Cotten covered the losses with other clients' deposits. The OSC called this an effective Ponzi scheme.


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"Staff also determined that Cotten misappropriated millions in client assets to fund his lavish lifestyle," Thursday's statement said, adding:

"OSC Staff would likely have pursued an enforcement action against Cotten and Quadriga. However, this is not practical given that Cotten is deceased and Quadriga is bankrupt, with its assets subject to a court-supervised distribution process."

The full report is linked below:

QuadrigaCX a Review by Staff of the Ontario Securities Commission by MichaelPatrickMcSweeney on Scribd

About Author

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to [email protected] or follow her on Twitter for updates @AislinnKeely.