According to the CEO of Coinbase, the largest US-based cryptocurrency exchange, the embattled Canadian exchange QuadrigaCX could have used the death of its CEO Gerald Cotten as a way to cut its losses, after running fractional since 2017. Notably, he noted he doesn’t believe it pulled an exit scam.

According to a series of tweets Brian Armstrong published, in which he emphasized this is a guess that should be taken as “pure speculation,” he revealed Coinbase has made its own internal research into the case, and initially found that QuadrigaCX had funds in cold storage being controlled manually, that were moved in early 2018.

Armstrong noted the exchange is one of the oldest in existence, as it has been running since 2013. Per his words, if they “planned an exit scam, it likely would have been timed better.” The CEO noted that QuadrigaCX suffered a “multimillion dollar bug in June 2017,” before things went wrong.

This, Armstrong added, is when movements from the exchange’s cold storage wallets started occurring.

While the Canadian exchange could, presumably, be attempting to escape its situation the 2018 bear market, that saw the price of most cryptocurrencies drop by 85%, could have seen the liquidity of its platform dry up.

Per Armstrong, the “sequence of events suggests this was a mismanagement with later attempt to cover for it.” He added:

The CEO of Coinbase added that when Gerald Cotten passed away, the exchange could’ve taken some time to debate the situation, and used it to claim it no longer had access to its money. Armstrong finished by noting that while the story isn’t perfect “it does seem plausible.”

It’s worth noting that other researchers have questioned whether QuadrigaCX ever had funds in cold storage to begin with. Moreover the researcher, MyCrypto’s Taylor Monahan, found suspicious transactions from QuadrigaCX to exchanges like Poloniex, Bitfinex, and Shapeshift, suggesting the funds could’ve been liquidated.

Monahan has urged caution regarding the use of data to jump to conclusions. Armstrong has also noted that as “the case unfolds we might find out we were incorrect.”

QuadrigaCX’s Situation

As CryptoGlobe has been covering, QuadrigaCX claims to have been locked out of $145 million in cryptocurrencies stored in cold wallets after Cotten passed away. His wife, Jennifer Robertson, has filed an affidavit where she reveals the CEO single-handedly managed the exchange’s transactions through his laptop.

Since then, the Supreme Court of Nova Scotia has granted QuadrigaCX creditor protection, and appointed Canadian law firms Miller Thomson and Cox & Palmer to represent its customers in the upcoming proceedings.

The cryptocurrency exchange claims to have run out of funds, and has recently transferred the remaining cryptocurrencies it had in its hot wallets to Ernst & Young, an auditor monitoring the case’s proceedings.

The exchange’s downfall has notably cost at least one cryptocurrency enthusiast his $420,000 life savings.