QuadrigaCX: British Columbia’s Regulator Reportedly Didn’t Have Oversight Over the Exchange

Those using the now embattled cryptocurrency exchange QuadrigaCX won’t be able to count on support from British Columbia’s securities regulator, the British Columbia Securities Commission, as it wasn’t regulated by the agency.

According to Bloomberg Brian Kladko, a spokesman for the British Columbia Securities Commission, revealed the agency currently has no indications QuadrigaCX was “operating as a marketplace or exchange under British Columbia securities laws.” Kladko concluded:

As such, BCSC does not regulate it.

The cryptocurrency exchange went down weeks after his founder and CEO Gerald Cotten unexpectedly passed away, on December 9. It was taken down after it was revealed Cotton was the only person with access to its cold storage keys, meaning QuadrigaCX was left locked out of the $145 million it owed users.

Reports have shown he filed for a will 12 days before passing away in India, and the documents show he left all his assets to his wife, Jennifer Robertson, and he made her the executor of his estate. In an attempt to resolve the complex situation Robertson filed an affidavit, where she mentioned she wasn’t able to retrieve the funds.

She explained:

The laptop computer from which Gerry carried out the Companies' business is encrypted and I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them (the passwords) written down anywhere.

QuadrigaCX has since been granted creditor protection by a Nova Scotia Supreme court, which essentially protects it from lawsuits while it figures the situation out. To pay back its 115,000 users, it’s reportedly looking to sell its platform.

Research conducted by blockchain portal Zerononcense has, however, claimed QuadrigaCX might’ve never had the $145 million to begin with, and that the story of being locked out doesn’t make sense as wallets associated with the exchange have been moving funds. Cotten’s death certificate, issued by the Government of Rajasthan’s Directorate of Economics and Statistics, has since surfaced.

To date, Kladko added, no crypto exchange has been recognized as a marketplace by the securities regulator. The regulator does have oversight over the firm behind QuadrigaCX, Quadriga Fintech Solutions Corp., which is a public company. The British Columbia Securities Commission has reportedly ordered its shares to stop trading back in 2016, as it failed to “make required filings.”

Canada’s federal police agency, the Royal Canadian Mounted Police, is aware of the situation but hasn’t revealed whether it’s investigating it or not. Sgt. Penny Hermann, in an email to Bloomberg, was quoted as saying:

The RCMP is aware of the allegations against Quadriga CX. We will not be providing any further information.

Robertson, Cotten’s widow, has reportedly hired a hacker to try to access the embattled exchange’s funds in his laptop.

Bitcoin From the 2016 Bitfinex Hack Mysteriously on the Move Again

Little over 30 bitcoins stolen from the prominent cryptocurrency exchange Bitfinex back in 2016 have mysteriously started moving once again, even after the arrest of two individuals allegedly involved in the exchange’s security breach.

According to Whale Alert, a large transaction monitor, an initial transaction of 28.39 BTC was made from a wallet associated with the 2016 Bitfinex hack before a second transaction of 2.27 BTC was made. Both went to unknown wallets, with the total amount being transferred coming close to $300,000.

The hackers often move their funds around, presumably in an attempt to launder them so they can cash out. In June 2019, they moved over 172 BTC over a total of five transactions to unknown addresses. In August, around 30.6 BTC, then worth over $350,000, were moved as well.

In total, the hackers stole nearly 120,000 bitcoins from the popular cryptocurrency exchange in 2016. At the time, one bitcoin was trading for around $600, which means they stole roughly $72 million. As the price of the flagship cryptocurrency skyrocketed since then, the 120,000 BTC are now worth over $1 billion.

Taking this into account users on social media started predicting a price cash, as if the hackers were able to cash all of their funds out the price of BTC would certainly drop significantly. To cash out, however, they have to find a way to launder the funds – a challenge at a time in which every liquid cryptocurrency exchange enforces know-your-customer (KYC) checks.

Bitcoin from the 2016 Bitfinex hack moving may be surprising, as Israeli police last year arrested two brothers allegedly involved in the security breach. It’s worth pointing out, however, in the UNUS SED LEO token whitepaper the exchange appeared to give the hackers a chance to return their funds and keep a specific percentage “as a reward for collaborating in finally resolving” the issue.

Referring to past transactions Anneka Dew, Bitfinex’s marketing director, noted they weren’t related to the procedure outlined in the token’s whitepaper.

Featured image via Pixabay.