When Quadriga co-founder Gerry Cotten died at 30, millions in crypto currency disappeared with him. But some investors wonder if he actually did die.
When the 30-year-old died — unexpectedly and mysteriously — in 2018, some $250 million worth of Canadian cash and cryptocurrency also went missing. Around 75,000 customers of Cotten’s QuadrigaCX crypto exchange suddenly lost fortunes they had earmarked for everything from tuition to retirement funds, life savings and mortgages.
Cotten now stands accused of perpetrating an ultra-modern Ponzi scheme, powered by technology and 21st century cunning. And some investors are suspicious that he may have faked his own death.
The story, as chronicled in a new documentary, “Dead Man’s Switch,” streaming on Discovery+ Thursday, began in 2014 when Cotten and Michael Patryn launched Quadriga.
“It was one of the only games in town [for crypto enthusiasts],” Sheona McDonald, who directed the doc, told The Post. “You transferred them $1,000 and you could see the crypto in your account. I think there were a couple years when it ran legitimately … I don’t think Gerry could have imagined a future with money pouring in the way it eventually did.”
Few knew, however, that the two partners had already cut their teeth on identity frauds, money laundering, pyramid schemes and other questionable get-rich-quick gambits.
Cotten grew up in Belleville, Ontario, nicknamed the Friendly City. His parents owned an antiques shop and he graduated from Toronto’s York University with a bachelor’s degree in business economics.
In the early 2000s, he met Patryn, who was six years older and has a mysterious past. According to Vanity Fair, Patryn was arrested in Southern California, where he lived with his family, and pleaded guilty to conspiring to transfer stolen identity documents. He was sentenced to 18 months in federal prison before being deported to Canada in 2007.
By then, he and Cotten had already communicated with one another on a message board called TalkGold. It focused on high-yield investments, which promised impossibly fast and high returns. The site is said to have attracted a strange brew of people who ranged from gullible suckers to sharp hustlers hoping to rope them in.
At 15 years old, Cotten put his first pyramid scheme into motion. According to Vanity Fair, it was dubbed S&S Investments and promised returns of up to 150 percent in just 48 hours. The sham ran for three months before shutting down with investors’ money disappearing.
By the time Cotten and Patryn launched their company, Quadriga — promoting it as a cheap and easy way for people to buy, sell and trade crypto at a time when it was an ordeal for the uninitiated — in 2014, they were already well versed in the dark arts.
Vancouver, according to David Gerard, who authored “Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts,” was the perfect place. “Canada is notorious for having a lot of nice, trustworthy people — and a buttload of others who exploit them,” Gerard told The Post. “Gerry, the front man in the operation, was a very charming fellow and Bitcoin fans are gullible. Talk to them about the future of money, throw in a few buzz words and they believe any garbage.”
Patryn would soon split after an alleged spat about whether or not to go public.
It didn’t hurt that Quadriga entered the crypto game at an opportune moment. It launched when Bitcoin sold for less than $300 per coin. During 2017, when the exchange was up to speed and running, the currency’s value jumped to $13,000. Investors could not get in their money quickly enough.
By then, Quadriga ruled as the largest crypto exchange in Canada, putting through more than $1 billion of transactions in 2017.
And Cotten made it easy. Rather than leaving customers to maintain their own digital wallets with 64-character codes — known as private keys — that were impossible to remember and disastrous if lost, Quadriga often held onto the crypto for them.
That would later be a problem. As McDonald put it, “If you don’t own your crypto key, you don’t own your crypto.”
She added that cashing out was often problematic for clients. “There were legitimate banking issues. Banks did not want to deal with crypto companies. [Employees of] Quadriga would bring you cash when they could” — and, depending on how hard you pressed for payment, that could take weeks. “They would bring it to you in shoe boxes or big envelopes,” McDonald said. “Or else, they would send checks through third-party payment processors.”
Read full story on New York Post
