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Why bitcoin could triple over next year. Visa CEO: We see digital currency as a player in global commerce. Strategist on bitcoin: Pullback is very expected.

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Winklevoss twins call crypto the 'ultimate social network'. In October , TalkGold members began to debate whether Patryn might in fact be Omar Dhanani, one of 28 suspects who had been arrested by the U. Secret Service in a global sting operation targeting an online marketplace for stolen credit card information and forged documents. Upon pleading guilty to conspiring to transfer stolen identification documents, he was sentenced to 18 months in federal prison. After his release in , he was deported to Canada. In a gambit of either flagrant carelessness or irrepressible egotism, Dhanani officially changed his name to the pseudonym he had used in his online criminal ventures, first to Omar Patryn and later to Michael Patryn.

The most successful of these was Midas Gold, incorporated in early It served as an independent payment processor for Liberty Reserve: a digital currency that was operated by an American in Costa Rica and used by drug cartels, human traffickers, child pornographers, and Ponzis to launder money.

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Midas Gold was an intermediary between Liberty Reserve and its traders, transferring cash into digital currency and back again, ensuring that no centralized record of clients existed. In its registration documents, Midas Gold listed as its contact gerald. Midas Gold, which had begun to accept Bitcoin, was seized too. By that point, however, a new Gerald Cotten venture was already six months old. The Quadriga Fund was an HYIP that claimed to invest in venture capital projects and foreign currency exchange markets; it could be funded with Liberty Reserve and Bitcoin, using payment processors operated by Patryn.

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A quadriga is a chariot yoked to four horses abreast. Quadriga Fund claimed to be operated by four unnamed investment managers. In October , Cotten placed a job posting on an online forum, BlackHatWorld, that marketed frauds and stolen goods. If Quadriga was conceived as a scam, what kind of scam was it? Most HYIPs, including those previously operated by Cotten, were exit scams: Ponzis that, after reaching a critical volume, abruptly close up shop. In some exits, the operator simply vanishes with the funds. More commonly, however, he will blame external forces a meddlesome bank that freezes its accounts , provide fragmentary refunds, and equivocate until its investors give up hope.

The delay tactic is more successful than might be expected, since customers of HYIPs understand, on some fundamental level, that promises of outsized returns are too good to be true; besides, there was always another outrageous bargain a few clicks away. The same blind faith that attracts the marks also drives them away. Some of the early visitors to the Vancouver Quadriga office even thought the exchange was just a show.

Was Quadriga built to last, in other words, or built to self-destruct? It was not built, in its early days, to make money. Perhaps—this scenario goes—Cotten believed that the cryptocurrency bull market would continue indefinitely, leading to higher trading volumes and profits; Cotten would have forced Patryn out, knowing that with intensified public scrutiny, his past would become a liability.

This would have been a startling about-face; in the early days, those who knew them believed that the company belonged to Patryn, with Cotten serving as a front man. Gerald had a clean record, he could speak to the masses, while Michael operated the back end. Gerry and Alex [Hanin, a web developer] created and ran Quadriga, with Gerry running operations. After hearing that Patryn had been bragging all over Vancouver about his talent for laundering money, Mueller unearthed the connection to Dhanani. Nobody followed up with him. He figured that Dhanani had friends in the underworld and in federal law enforcement.

Among those Mueller warned was Amber Scott, an anti-money-laundering expert at a compliance firm in Toronto called Outlier Solutions. She told clients and friends to avoid Quadriga. But when she met Cotten at the Toronto Bitcoin hub Decentral, she found him funny and sweet. She believed in him. She decided that his involvement might mean that Quadriga was legitimate after all. She appeared with him, and even introduced him, at conferences.

There was also the fact that these were Canadian people, Canadian companies. She froze and said something about having to shampoo her cats. Cotten flushed. He never mentioned Patryn in her presence again. The little brother under the thumb finally grew some balls. That was our perception, at least.

In the fall of , Bitcoin began its wild rise.

Quadriga Fintech Solutions

But it was too much too fast: The young, inexperienced cryptocurrency purist was overwhelmed, beset by coding errors, scrutiny from banks, incompetent contractors, and crooked payment processors. He had to resort to increasingly questionable practices in a desperate effort to salvage his dream. If you blur your eyes, this narrative—Gerry Tries to Make Good—nearly coheres. Far more likely is the narrative of Gerry the Royal Fuckup.

In this version of the story, scams beget scams and incompetence snowballs into recklessness and squander. The public bid was a last-ditch effort to salvage a flailing Ponzi, exploiting positive press and public sympathy to bilk money from investors. He also created dozens of false trading accounts to stimulate trading volume on the platform—a fact he even disclosed in the filings. He neglected to disclose, however, that he filled those fake accounts with invented funds, trading counterfeit Bitcoin for real Bitcoin and Canadian and American dollars.

When he did file, he claimed no income from Quadriga. Cotten provided withdrawals manually, seeming to give preference to the customers who complained loudest in public forums. He sent cash, in paper bags and shoeboxes, to coffee shops, laundromats, and pool halls. He also accepted cash deposits. A year before his death he sent a colleague a photograph taken in the kitchen of his Kelowna home. On the polished granite island are a vase of pink roses, the discarded lid of an ice cream carton, a copy of National Geographic, and dozens of dictionary-thick, rubber-banded stacks of Canadian currency in crisp 20s, 50s, and s.

Still Cotten was not directly responsible for all of his troubles. Because Canadian banks refused to accept cryptocurrency businesses as clients, Quadriga had to rely on third-party processors, which levied outrageous fees and in some cases stole funds outright. Patryn, Jennifer Robertson, and at least a couple of other Quadriga contractors each operated their own payment processing firms—a significant conflict of interest, though not illegal.

Cotten, it turned out, had transferred the funds into personal accounts on competitor exchanges. At least some of those accounts had also been emptied. On one particular margin account, he conducted 67, individual trades alone, placing enormous bets on fledgling currencies like Dogecoin, OmiseGO, and Zcash. In Cotten spoke publicly of moving currencies between exchanges to take advantage of arbitrage opportunities. It was the behavior of a doomed gambler employing the martingale strategy, successively doubling down in a desperate effort to get back to zero, until he had dug a hole so deep that he could only be buried inside it.

Then he flew to India, where things managed to get even worse. Call it the Mastermind Theory.

Quadriga CEO Gerald Cotten dies, leaving $ million of cryptocurrency locked away - CNN

It begins with a few findings that do not fit neatly into the Royal Fuckup narrative. Cotten had mentioned having a safe bolted to the rafters in the attic of his home in which he had stored the passwords to his various cryptocurrency accounts. After learning of his death, one of his contractors immediately went to the house and searched for it.

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He found the place in the attic where four holes had been drilled through the rafters. But the safe was gone. There were rumors of other employees taking similar trips. In this way Cotten could have stowed away a fortune in foreign bank accounts in preparation for a grand exit.

What if the furious trading on other exchanges near the end of his life was not careless but calculated? In June, EY said in a report that the company's "operating infrastructure appears to have been significantly flawed from a financial reporting and operational control perspective.