QuadrigaCX is the gift that keeps on giving. The now-defunct Canadian cryptocurrency exchange has been at the center of a six-month-long controversy involving 650,000 ETH, a “Big-Four” auditor, a private jet, and the mysterious death of the man behind it all.
Ernst and Young, the audit giant, the court-appointed third-party monitor and now the bankruptcy trustee of the QuadrigaCX proceedings, released its fifth report to the Nova Scotia Superior Court of Justice with some startling claims about the tidings of the now-deceased CEO, Gerald Cotten.
The report suggested, right off the bat, that the exchange was muddled in internal administrative strife, due to a lack of proper accounting. The onus for this strife was on one single individual, Cotten, and “internal controls” were negligible. The report said,
“Quadriga’s operating infrastructure appears to have been significantly flawed from a financial reporting and operational control perspective. Activities were largely directed by a single individual, Mr. Cotten and as a result, typical segregation of duties and basic internal controls did not appear to exist”
A line of demarcation between the funds of the exchange and users was also absent, which the report summarized as a lack of “segregation.” The funds belonging to users, held by the exchange, were used “for a number of purposes other than to fund user withdrawals.”
Despite being a cryptocurrency exchange, presumably in an effort to hide their tracks, QuadrigaCX engaged in several ‘cash’ transactions. However, the same could not be verified by the monitor. Even the most basic of corporate records, especially the ones pertaining to the exchange’s fiat and crypto inventories, could not be traced and in this too, Cotten was at the head of it all.
“In addition, the Monitor understands passwords were held – 7 – by a single individual,