QuadrigaCX: Founder's Widow Claims He Mixed Personal Funds With Those of the Exchange

The widow of Gerald Cotten, the founder and CEO of Canadian cryptocurrency exchange QuadrigaCX, has recently revealed he told her he used his own money to process customers’ withdrawals during a legal battle with a bank.

According to CoinDesk, Cotten’s wife Jennifer Robertson claimed through a statement that Cotten told her he used his won funds while the exchange was battling with the Canadian Imperial Bank of Commerce (CIBC), which froze its bank account in 2018 while trying to determine the origin of its funds.

The statement sent by law firm Steward McKelvey stated:

While I had no direct knowledge of how Gerry operated the business, he told me that he had been putting his own money back into QCX to fund user withdrawals in 2018 while the CIBC money remained frozen. I believe Gerry had the best interests of the business in mind, and cared for his customers.

In her statement, Robertson also revealed the law firm would stop representing the cryptocurrency exchange over an unnamed conflict of interest, which was discovered by the court-appointed monitor Ernst & Young (EY).

Per the news outlet, the statement noted details of the conflict of interest weren’t shared with Robertson.

QuadrigACX’s Missing Funds

As CryptoGlobe has extensively covered, QuadrigaCX’s founder and CEO Gerald Cotten passed away unexpectedly last year, and was reportedly the only person with access to the exchange’s cold storage wallets, with $145 million worth of client funds in them.

The exchange has earlier this year been granted creditor protection while figuring out the situation, and reports have suggested Cotten could have been storing users’ funds in paper wallets.

EY was appointed by the Nova Scotia Supreme Court as a monitor for the exchange. It has been making progress securing some of QuadrigaCX’s fiat holding from third-party payment processors, but when it comes to the millions worth of crypto it found six empty cold storage wallets that hadn’t been used since April.

The case has seen many in the cryptocurrency space draw their own theories as to what’s going on. A researcher has claimed to have found $90 million of QuadrigaCX’s missing funds on various cryptocurrency exchanges, and various Reddit posts seem to show the Canadian trading platform’s co-founder used to take large positions on BitMEX.

What’s clear about the case 115,000 users are owed millions. One in particular, as covered, has lost his $420,000 life savings because of the exchange’s downfall.

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.