Some considerably shocking revelations have surfaced in audit firm Ernst & Young’s (EY) recently released report titled “Third Report of the Monitor”, in the creditor protection proceedings of the controversial Canadian crypto exchange, QuadrigaCX.
The report clearly claims that the wallets used to store Bitcoin (BTC) on the platform, have been inactive since April. The report states:
“To date, the Applicants have been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Cold Wallets for deposits in April 2018, however, the Monitor and Management will continue to review the Quadriga database to obtain further information.”
The firm has identified six separate crypto wallets that stored BTC. It has been discovered that there have been no deposits in the wallets since April 2018. This is a serious concern for investors of QuadrigaCX and those who are now part of this long drawn controversy.
The exchange, along with the court and EY has been trying to find out where all the funds went, after the death of the exchange’s founder, Gerald Cotten. The exchange had filed for creditor protection in early February over this unfortunate incident. All access to cold wallets and respective keys were lost. Approximately $145 million in digital assets have been locked away.
The report further claims that EY has discovered 14 user accounts that “may have been created outside the normal process by Quadriga” and that “[i]t appears that the Identified Accounts were created under various aliases.” There understandably is a lot of confusion surrounding this at the moment. The report further states:
“…the Identified Accounts were internally created without a corresponding customer and used to trade on the Quadriga platform. [EY] was further advised that deposits into certain of the Identified Accounts may have been artificially created and subsequently used for trading on the Quadriga platform.”
The platform has stored its transaction and account balance data on the cloud by Amazon Web Services, which EY is also looking to access. However:
“Due to the account being a personal account in the name of Mr. Cotten, AWS has indicated that it is unable to provide the Monitor with access to the AWS Account to permit a copy of the data that it is hosting to be secured.”
Understandably it is a mess right now, but we hope EY can get to the bottom of it soon.