After exchange owner 'died with the password to funds', many traders found themselves bankrupt from alleged scam
Three years after the high-profile collapse of Canada’s largest crypto exchange in 2019, a man is speaking out on how an ill-fated decision to use the platform caused him to lose hundreds of thousands of dollars.
Software engineer Tong Zou had put his trust in Quadriga CX, Canada's largest cryptocurrency exchange, whose co-founder died with the password to his clients' assets, according to a report by Sky News.
The mysterious death of 30-year-old Gerald Cotten left tens of thousands of investors out of pocket and sparked speculation that he was still alive. Before his death, it was discovered that Cotten was running a Ponzi scheme, which investigators described as "an old-fashioned swindle cloaked in modern technology."
After losing about $500,000 Canadian, including $200,000 gifted to him by his parents, Zou is speaking out. His story is among several others now being investigated in a new Netflix documentary.
"A lot of people want to blame just me for this," he says. "Yeah, I deserve some of the blame because it's irresponsible. I should have done more research. It's also the unluckiness, the timing. How could I know? I guess I trusted them a lot.'
Zou had accumulated significant debts in 2018 after taking out US$80,000 in loans to purchase Bitcoin before the cryptocurrency's value plummeted. To pay off his debt, the software developer decided to sell his San Francisco condo and relocate to Vancouver.
He needed to transfer US$400,000 from his US account to his Canadian account, but he didn't want to pay a bank commission. He claims that he had successfully used other cryptocurrency exchanges in the past, and that he has friends who had used Quadriga.
"I did some research on Reddit,” he said. “They said: 'Oh it's going to take a while but you always get your money. It's not a scam'."
Zou used his money to buy Bitcoin before selling it on Quadriga, expecting $500,000 Canadian to be remitted to his bank account in Canada. However, three months later, the money was still missing.
After repeatedly emailing Quadriga, he said the company blamed the delay on a legal battle it was having with a bank.
"I kept asking them: Where's my money? - October, November, December - during all that time," he said. "At that time, there was nothing I could do. There was no way of getting my money back. Once I deposited it, it was basically gone. It turned out to be a scam."
While his mother was sympathetic to his situation, he did not inform his father, who only learned of the money’s loss after his son appeared on the news.
Cotten's widow, Jennifer Robertson, has since complained of getting threats from online cryptocurrency communities, despite denying any knowledge of her husband's apparent crime.
According to a 2020 statement from the Ontario Securities Commission, the collapse of Quadriga in 2019 cost at least $169 million Canadian to 76,000 investors. Cotten's illicit trading was responsible for almost $115 million of that, according to the regulator.
Zou is currently participating in a legal action to recover assets for customers who lost money with Quadriga, but he claimed no substantial progress have been made since 2020.
