The QuadrigaCX plot only seems to thicken as new evidence suggests that their late CEO had been involved in a money laundering scheme, reported on April 9, 2019.
The now-defunct crypto exchange first made headlines when it was discovered that hundreds of millions of dollars in customer funds were locked away in a cold wallet that only Gerald Cotten, their late CEO, had access to.
As soon as the story broke, there were fake death conspiracies and exit scam theories floating around and even now that they have been declared bankrupt, there is still speculation about what truly went on. An April 9, 2019 report now alleges that money laundering might have been a part of the mix.
The report from former BTCManager contributor Amy Castor cites data published by a Reddit user by the name of QCXINT. The data suggests that the two founders of QuadrigaCX, Michael Patryn and Gerald Cotten, had previously been involved in a Liberty Reserve exchanger called Midas Gold.
Patryn, it has been revealed, is actually Omar Dhanani, a convicted felon who had been charged with identity theft in the United States in 2004 for his involvement in the Shadowcrew.com identity theft ring.
Part of the ring’s activities included an electronic money laundering service in which interested parties would send Dhanani money through western union and he would help launder it using e-gold accounts for a fraction of the cost.
After serving 18 months in prison, he moved to Canada and started the Midas Gold Exchange which eventually launched on M-Gold.com and listed such digital currencies as E-Gold, HD-Money, WebMoney, WMZ E-Currency, AlterGold E-Currency.
The issue of money laundering comes up when Liberty Reserve is examined.
The platform served as means for criminals to send funds to each other using LR, their digital currency which was sent anonymously and only needed an email address to open an account with each LR being worth $1.
While there was no identity verification for customers, LR could not be bought directly but had to go through a third-party exchange such as M-Gold, which bought LR in bulk, resold them with a five percent markup and allowed the criminals to transact business with no paper trail.
When the site was taken down in 2013, data revealed that M-Gold ranked 342 out of 500 in accounts that made use of the site. When the account M-Gold was examined, [email protected] was listed as its official email address but Omar Patryn was listed as the account name.
This brings up suspensions that Cotten had been involved in the money laundering scheme, especially since QuadrigaCX was founded only months after the M-Gold account was seized. Also, the IP address of the email could be traced to the same location registered for the owner and operator of QuadrigaCX.