Bitcoin, Ponzi Schemes, private yachts and lack of 250 million dollars


This story begins with a smiling boy.This boy visited the Sunnybrook Yachts in the summer of 2017, after the Bitcoin course reached an all-time high.In just five months, the value of Bitcoin had tripled. Sunnybrook is the largest yacht operator on the east coast of Canada.Clients included surgeons and litigators, as well as expensive hats…

imageThis story begins with a smiling boy.This boy visited the Sunnybrook Yachts in the summer of 2017, after the Bitcoin course reached an all-time high.In just five months, the value of Bitcoin had tripled.
Sunnybrook is the largest yacht operator on the east coast of Canada.Clients included surgeons and litigators, as well as expensive hats traveling from Toronto, Paris and Hawaii, Nova Scotia during the summer.

His women wear silk and manolos.

The nails are perfectly manicured for $ 300, because the money does not matter here.
The smiling boy, however, stood out from the other clientele.He was wearing a wrinkled golf shirt and cargo shorts.

He was obscurely young, with sandy hair and pale skin that had not seen the sun since puberty.

He was accompanied by a friend who was driving his own Jeep.
That day, the boy wanted to buy a boat.He wanted to reach the Caribbean without having to stop in Canada or the United States.It should cost him $ 600,000.He called his boat the Gulliver, according to the traveler who let himself drift from his luck and the mercy of the waves.
The most remarkable was the strange way the young man always seemed to smile.

He has always been described as a sweet and flawless smile.It calmed the strangers and made them look carefree.It seemed authentic, honest and consistent with its nature.

Later, however, it turned out that the least of this boy was real, including his smile.

It was part of a masquerade behind which opened abysses.The boy’s name was Gerald Cotten and here is his story.
This article is strongly inspired by Nathaniel Rich’s wonderfully written article on Vanityfair.An unexpected death and the loss of a quarter of a billion dollars in crypto
In a few dozen hours of navigation, the navigator had to learn a few things about his new client, Gerald Cotten.He lived with his girlfriend in a triple room on the Fall River, north of Halifax, a rich suburb recently dug into a forest near a long, dark lake.

Cotten owned another house in Kelowna, in the BC wine region.Another of his houses was in Calgary.He also owned 14 rental properties in Nova Scotia.There was also the Lexus and the sparkling single-engine aircraft, a Cessna 400, that he had never tried to fly.The couple traveled constantly abroad and planned to sponsor a home for 12 children in an orphanage in India.
Cotten rarely mentioned his work, but one or the other detail still found his way to the surface.

He was founder and CEO of Quadriga, the leading bitcoin exchange market in Canada.He ran the entire business from his MacBook Pro, which he had always had.Once he left him on the Gulliver, causing temporary hysteria as the yacht had already left the dock.
Cotten occasionally returned to his yacht, but sporadically, the following summer.

He seemed to be very busy.In December, a phone call explained that smiling boy Gerald Cotten had died suddenly during his honeymoon in Jaipur.
A month later, a national press article revealed another detail about Cotten: he was the only person to possess the password for cryptocurrency accounts worth about a quarter of a billion dollars.dollars.
No one else knew how to get money.More than 75,000 Quadriga account holders no longer had access to their own money.
The Supreme Court of Nova Scotia declared the company bankruptcy behind Bitcoin & Crypto Exchange and chose the audit firm Ernst & Young as a third party.

You must be responsible for securing lost funds from Quadriga’s creditors.Additional investigations have been initiated by the Royal Canadian Mounted Police, the FBI and at least two other law enforcement agencies, which have not been made public.
However, the most effective and thorough survey to date has been conducted by anonymous users posted on Twitter, Reddit, Pastebin and Telegram.Their results speak a clear and coherent language: Gerald Cotten is still alive! The success story of a bitcoin enthusiast
The first portrait of Cotten, which was made in February 2018 after the announcement of his death by a message published by Quadriga on Facebook, was that of a computer scientist who had entered the right company at the right time.

The fundamentals of his narrative were conventional fades, at least if his interest in decentralized monetary systems is expected to be exceeded.
He grew up in a big brick house in a quiet street of a community with the utopian name “The Friendly City” on the waterfront between Toronto and Montreal.

In 2010, he earned a Bachelor of Business Administration in a paid program at the School of Business at York University.His parents owned an antique store.Cotten, however, decided to join Crypto.
A few years after graduation, Cotten moved to Vancouver and joined a community of entrepreneurs passionate about Bitcoin.He attended meetings in cafes and dormitories, organized by a select group of about 10 people who chose Vancouver.Bitcoin co-op called.A conspiratorial community with an enthusiasm for the libertarian ethos of digital currency called Bitcoin.

Attracted by their promise of decentralization, transparency, speed and independence of governments and financial institutions.Bitcoin would allow more than two billion people who do not have access to banks to send and receive payments.Bitcoin would ensure the stability of citizens of countries with chaotic currency and eliminate all bank charges.
With all these convincing buzzwords, Cotten knew how to cope, but his passion seemed to burn for the speculative possibilities of Bitcoin.
In April 2013, at the time of Cotten’s appearance in Vancouver, the price of a Bitcoin had risen to $ 266.At the time, it was not easy to buy or sell Bitcoin.This process required technological sophistication and patience at the time.Seventy per cent of global Bitcoin trade was made through Mt.

Gox, a stock exchange based in Tokyo.This means that we had to make a bank transfer to Japan.Canadian banks have nothing to do with Bitcoin.Bitcoin enthusiasts had to transfer funds through a range of intermediaries, which significantly increased transaction costs.
“It was so hard to buy Bitcoin in Canada,” says Cotten in a strangely energetic and curious voice in an interview.

“You could not link your bank account anywhere – it was just a big challenge.” The idea of ​​the Bitcoin Quadriga stock exchange is born
In November 2013, Cotten and his former partner Michael Patryn founded Quadriga or QuadrigaCX from Bitcoin & Crypto Stock Exchange.Michael Patryn was a currency trading specialist passionate about Brazilian jujitsu and luxury cars.
In the market then still small and inefficient, Quadriga has quickly made a name.

It was the least expensive, fastest and apparently the safest bitcoin trading platform with a cash service license from FinTRAC, Canada’s anti-money laundering authority.Quadriga has also installed a Bitcoin machine in its office – the second of its kind in Canada.

It was even possible to give gold per ounce personally and trade it for bitcoin.
The dream of a cryptographic exchange, led by bitcoin enthusiasts, seemed perfect.
Cotten has won the trust of other Bitcoin enthusiasts with ease.His flawless reputation in Vancouver, where he was director of Bitcoin co-op became.He began organizing Weekly Meetups at Quadriga’s offices.Quadriga sponsored local educational conventions and events in Bitcoin, investing between $ 500 and $ 1,000, which created an unpredictable acquisition gap.

Quadriga was often the only Bitcoin company willing to sponsor like-minded people.
Cotten’s generosity helped to balance a social distance that, despite his inexorable cheerfulness, prevented him from establishing close relationships.He seemed to prefer knowledge to friends.
In February 2014, six weeks after the launch of Quadriga, Mt.Gox abruptly suspended its operations, claiming that hackers stole $ 473 million from customer accounts.A year later, Canada’s largest stock market announced at that time CaVirTex their closure and also blamed the pirates.The second largest stock market Cave of Satoshi closed in the same week.

Quadriga became overnight the dominant Bitcoin market in Canada.
The following year, it launched a listing offer on the Canadian stock exchange and submitted to a complete financial audit.”We are delighted,” said Cotten at the time, “that we can offer an unprecedented level of transparency.”
Quadriga has raised close to $ 850,000 in private capital.After a dispute with one of the major investors, Cotten has redoubled efforts.The entire Quadriga board of directors has therefore resigned.Only Cotten remained the only full-time employee of Quadriga.
Despite other problems, such as a software bug costing C $ 14 million and seizure of C $ 21 million due to an error by a payment service provider, Quadriga profited furiously the price of Bitcoin and its vertiginous increase.
In 2017, when the price of a bitcoin rose to nearly $ 20,000, Quadriga processed nearly $ 2 billion of transactions on 363,000 individual accounts.

The stock market took a small share of each of these transactions.
Cottens’ reputation as a true Bitcoin disciple survived his death on December 9, 2018.The circumstances of the death of Gerald Cotten, bitcoin enthusiast
In February, the Canadian broadcaster interviewed Michael Patryn, Cotten’s business partner.He met Cotten online more than five years ago.”It looked like a ray of sunshine,” Patryn told the interviewer.”The guy always had a big silly smile and a laugh, he was joking all the time, he always said that he was not open to a lot of people, but he was able to do it.

open to me.”
According to public opinion, stemming mainly from a careful study by the Canadian Globe and Mail, Cotten felt ill on the ninth day of his honeymoon in India, shortly after his visit to Canada.

Oberoi Rajvilas in Jaipur on December 8, 2018.He was taken to a private hospital and was diagnosed with acute gastroenteritis.The next afternoon, her condition worsened and blood tests revealed septic shock.

Before the doctors could stabilize him, his heart stopped beating.He was resurrected, but his heart again abandoned the fight.Just over 24 hours after the onset of his sudden stomachache, the boy, described with a constant smile, was pronounced dead.
The official cause of death was “complications of Crohn’s disease”.The gastroenterologist, who treated Cotten, told the Globe and Mail that death still haunted him.

“We are not sure of the diagnosis,” he said.No autopsy was requested.
The confusion has led to further confusion in the following.The body was returned to the Oberoi and then returned for embalming.The embalmer, however, refused to accept a body from a hotel.

The Oberoi employees then took him to a local medical school where an employee performed the procedure.The following afternoon, Cottens’ wife, Robertson, returned to Canada with the body.
A month passed before Robertson announced on Quadriga’s Facebook page that Cotten had passed away.

Meanwhile, Quadriga continued to accept new deposits, but did not pay.
Creditors began to ask questions online about the authenticity of official documents in a country.Finally, India is known to be able to buy fake documents.These issues hardened after learning that the death certificate had incorrectly spelled Cotten’s name and that the former president and director of the company that operated the hospital had been convicted of financial fraud two months earlier.
It was also revealed that Cotten had only written his will four days before he left for India.He owned $ 12 million in real estate, the Lexus, the Cessna and the newly acquired yacht Gulliver That included even $ 100,000 to spend on the couple’s Chihuahuah care.However, the will did not mention the external hard drives, the Cold Wallets, in which Cotten kept most of Quadriga’s funds.
This was sometimes the thing that bothered Bitcoin and Crypto enthusiasts the most.Cotten as a bitcoin enthusiast should have known better.

At the latest after he had made his will, he inevitably had to settle the question of what really happened after his death.
“It did not seem so unusual for Gerry to have a backup plan,” says Michael Perklin, founder of the world’s first security consulting firm using blockchain, and working for CaVirTex.He became friends with Cotten in Toronto in 2016.Cotten had refused to accept Perklin’s services for Quadriga.However, they were virtually office neighbors and worked side by side at Decentral Toronto, a blockchain company that rented offices and served as a hub for the Bitcoin scene in Toronto.
Gerry (Gerald) was a very cautious person who understood the need to secure private keys.

It is impossible for a man like Gerry, with all his knowledge and attitude, to leave that to chance.
When Perklin learned that Cotten was the only person who had passwords for the company’s assets and did not have an emergency plan in place, he claimed that he was in the process of collapsing.
Cotten himself warned of this danger during an interview in 2014.He claimed that he had written his passwords on paper and had locked them in a safe, “because that’s what he’s doing.” is the best way to keep coins safe.

Shortly before his death, Cotten, two employees of Quadriga, told his close friends and family that Quadriga had a “deadman switch” that would give them access to stock market funds in case of disappearance.or death.
But how is it all going together?
In particular, this question did not bother former customers dissatisfied with Quadriga.

The big breakthrough of their investigation came when the Reddit sniffer dogs picked up something that was hiding in public.He was the co-founder of the Canadian Bitcoin Exchange.It turned out that Cottens’ business partner, Michael Patryn, whom Perklin and almost every member of the Canadian Bitcoin community had known for years, was not really Michael Patryn.This led to the question of whether Cotten was probably a boy with a lot of secrets, whose smile should deceive.The mystery of the dubious business partner and co-founder of the Canadian Bitcoin Exchange
Since Cotten’s death, an ongoing conversation about the Quadriga affair has occurred about Telegram.Discussion group Quadriga Uncovered has almost 500 members.Many of them are creditors who use the forum to discuss in detail the claims process and to share revelations and theories about the doubtful case.Journalists, FBI and RCMP detectives, as well as some of the initiators of the ongoing investigation also visited the chat.

Including Patryn, whose whereabouts are unknown for about a year.In his comments, whether it was group discussions or private discussions, he constantly downplayed his involvement in Quadriga and refused to talk at length about his past.But it was his past that was the subject of the Quadriga investigation.
Patryn had said that Cotten was like a little brother.

The same goes for those who have known both, although the characterization is generally not a compliment.

People felt mainly indisposed in the presence of Patryn.He appeared unexpectedly in Vancouver.At a time when the Bitcoin co-op There was a small group of crypto enthusiasts, Patryn rose at the door one day and said: I am Mike.I am going to build a Bitcoin exchange.

Let’s work together.
“It was strange,” said Joseph Weinberg, founder and CEO of several digital currency companies, former student and former participant of the Bitcoin Co-op Meetups.”It was soon obvious that he was not what he claimed to be.” Sometimes he introduced himself as Michael of India, sometimes he said that he was Michael from Pakistan, or Michael from Italy.But (…) he knew what he was doing.This was not his first rodeo.
Patryn, on the other hand, denies that it comes from other countries.This is not a nationalist.
Patryn has been described as a mysterious pretentious, which is not unusual in the field of cryptocurrencies.He also made vague allusions to a dark past and links to the underworld.He was strong, muscular, tattooed, and his face seemed to shine with calm.

Michael Patryn recalls Gerry Cotten, his business partner at Quadriga.Congratulation to @ybrend @CBCVancouver on the get.https: // r = https% 3A% 2F% 2F3gG2st8XkX #QuadrigaCX
– Jack Julian (@ Jack Julian) February 8, 2019
On Facebook, he posed with a tiger, a lion and driving a Lamborghini.Friends have told him that he often joked about his hatred of crooks, although his definition of the term seems quite idiosyncratic.

The theft of identity was, in his opinion, a bloodless affair, but lying in someone’s face made it unforgivable.He saw himself as an executor of rules, integrity and loyalty.He seemed alone.
One day he arrived in Cotten, who behaved like a little brother.However, as a friend said, “in a disgusting way”.

Crawling, almost submissive.When Patryn told a stupid joke that nobody found funny, Cotten burst out laughing.They were a strange couple.A strange couple like Bonny and Clyde
Patryn told reporters after Cotten’s death that they had met online more than five years ago.

Through careful research, however, a handful of detector dogs have been able to restore the confused online life of the quirky looking couple.They traced the relationship back to 2003 and a website called Gold Talk This program was dedicated to high yield investment programs or HYIP, better known as Ponzi programs.
Gerald Cotten certainly had a sophisticated understanding of bitcoin and cryptocurrency, but his expertise was in the art of trusting.

TalkGold has been a reservoir of blind trust and a dream of security to generate unbeatable returns with guaranteed value.Sparkling banner ads for investments in precious metals funds and foreign exchange funds and “real returns abroad” adorned the website in great detail.

Forums promoted promising new HYIPs, fraud alerts, advice on creating your own Ponzi or how to get out early enough to benefit from it, as well as recommendation recommendations for fraudulent programs.
Patryn joined TalkGold on April 3, 2003, the year the site was created.In one of his earliest contributions, he boasted of getting 30% of the monthly HYIP asset returns.Three months later, shortly after his 15th birthday, Cotten opened his account there.
Both have become regular users of message boards and related websites.Cotten published an average of four publications per day on TalkGold alone.Patryn allegedly told friends that he and Cotten met for the first time in a fraudulent scenario, just like the thieves of a film by Ernst Lubitsch who fall in love with him.

One of the other trying to empty his pockets.Cotten tried to deceive Patryn, Patryn trying to put Cotten in the dark on the run.Shortly after, they responded to each other’s public messages with insider jokes.A strange friendship is born.
Cotten learned quickly.He launched his own discussion page on HYIP in December 2003.

He was 15 when he named his first pyramid system.S & S Investments launched.He promised a return of “103% to 150% or more” in the “48 hours (usually in the 18)”.Cotten wrote in his pamphlet:
I’m afraid I do not fill this section of the page with the usual nonsense about how your statements are made.

We do not invest in stocks, bonds, stocks, precious metals or antiques.All I’m going to say is that we will generate your returns and that we are not what is called a Ponzi scheme or pyramid scheme.
When S & S ceased operations three months later and took most of its customers’ money, Patryn chose TalkGold to defend Cotten’s integrity.Patryn was 21 years old and only six years older than Cotten.
In October 2004, TalkGold members began to discuss the possibility that Patryn is actually Omar Dhanani, one of 28 suspects arrested by US intelligence agencies as part of a worldwide action to steal credit card information and fake documents online.Dhanani, known on another bulletin board as an expert in money laundering, was arrested in Southern California where he lived with his family.After pleading guilty, he was sentenced to 18 months in a federal penitentiary.After his release in 2007, he was deported to Canada.
Dhanani officially changed his name to the pseudonym that he used in his online criminal venture.First, he changed his name and now calls himself Omar Patryn and Michael Patryn.
Patryn briefly resumed publication on TalkGold and other HYIP forums, opening the door to a number of companies that traded digital currencies.

The most successful of these was Midas Gold, which was founded in early 2008.The platform served as an independent payment processor for the Liberty Reserve, a digital currency managed by an American in Costa Rica and used by drug cartels, traffickers, child pornographers and ponzis to launder money.Midas Gold was a mediator between Liberty Reserve and its dealers.

The money was transferred in the digital currency and reversed to ensure that there was no centralized customer card.

The list of registration documents Midas Gold [email protected] is your contact.
Cotten runs his own series of programs over the years.In the HYIP discussion forums, Cotten and Patryn defended against angry investors and presented themselves as satisfied customers of their respective business units.The websites of their companies often shared registration information and were operated by the same computers.

The idea of ​​Quadriga was born
On May 24, 2013, federal agents arrested Liberty Reserve administrators in 17 countries, closed their website and confiscated their files and bank accounts.This was the most important case of online money laundering in American history.Liberty Reserve’s 5.5 million user accounts executed 78 million transactions worth more than $ 8 billion.
However, at that time, a new company of Gerald Cotten was already six months old.The Quadriga Fund was a HYIP that claimed to invest in venture capital projects and foreign exchange markets.Liberty Reserve and Bitcoin have been accepted, Patryn payment processors being used.A quadriga is a car coupled with four horses.The Quadriga fund claimed to be managed by four (not named) investment managers.

“Wealth is freedom,” reads the prospectus.”When you invest with Quadriga, you stay in control.”
In October 2013, Cotten published an employment offer on an online forum named BlackHatWorld who marketed fraud and stolen goods.He sought “a programmer familiar with Bitcoin” to develop a website that serves as an “open market, such as a stock exchange, where people buy and sell Bitcoin”.The design had to be “simple but professional” and built quickly.
Less than three months later, Quadriga Fund was buried and the Quadriga CX was commissioned.
Choose the best stock market and the safest for you
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Exchange on the safest and best exchanges in the world! For comparison The Bitcoin Stock Exchange was nothing more than a high level Ponzi?
If Quadriga was designed as a scam, what kind of scam did it? Most of the HYIPs, including those previously operated by Cotten, were exit scams.Ponzis who, having reached a critical volume, abruptly close the doors of the shops.

In some outlets, the operator simply disappears with the funds.Often, however, external causes, such as hackers or frozen accounts, are also cited.
The procedure is always the same: make piecemeal repayments and remain ambiguous until investors give up hope.This delay tactic is more effective than some might expect, as HYIPs customers understand at a fundamental level that the promises of oversized returns are too good to be true.Some of them are probably waiting unconsciously for the inevitable end.

In addition, the next promise of financial freedom with guaranteed returns is just a few clicks away.The same blind faith that has attracted them keeps them away.
Maybe the Bitcoin exchange should also be used for money laundering, like Mida Gold.Quadriga’s corporate accounts have traded tens of millions of dollars worth of Bitcoin associated with Ponzi schemes and well-known illicit markets.
Some of the first visitors to the Quadriga office in Vancouver even thought that the bitcoin exchange was just a facade.”When you came in, it was a very superficial feeling,” said Joseph Weinberg.”Four offices in an unknown room, no business, it seemed hollow.”
Weinberg and several others who visited the Bitcoin Meetup Group office saw hundreds of paychecks on behalf of companies that were not Quadriga.They said that these pay checks were for people who were not Quadriga employees.

At the time, Patryn denied the existence of check and payroll printers.He suspected that visitors to the office had been “confused by scanners and money counters”.
The construction around the Bitcoin stock market did not seem to have been designed to be profitable.After the recent public bid for Quadriga’s revenues in 2015, the company was not profitable.
Cotten would have served as a leader in Quadriga, while Patryn would set the tone.”Michael a évidemment dirigé la série, mais la course a été très calme”, ​​a déclaré Weinberg.

“Il semblait qu’ils avaient un accord et des motifs partagés.Gerald avait un dossier vierge, il pouvait parler à la foule pendant que Michael servait le backend.”
Ryan Mueller, qui a mené l'enquête sur un fournisseur tiers à Vancouver, a également alimenté la rumeur.Il lui a été demandé d'examiner la demande d'inscription en bourse de Quadriga.

Après avoir appris que Patryn avait utilisé son talent en matière de blanchiment d’argent partout à Vancouver, Mueller découvrit la connexion avec Dhanani.Il a rejeté la demande de Quadriga et a transmis son enquête aux personnes chargées de l'application de la loi.Personne ne s'est plié.Mueller ne comprenait pas comment un détenu fédéral pouvait changer de nom, continuer à travailler et se soustraire à des poursuites.Il soupçonnait que Dhanani devait avoir des amis dans la pègre et à la police fédérale.
En raison de son passé et des conséquences qui auraient été à l'origine de l'annonce de la bourse Bitcoin Quadriga, Cotten Patryns se serait de plus en plus déplacé de la société.

Auf Patryns Weggang folgte dann das Ausscheiden des restlichen Vorstands, zu dem Patryns Verlobte, Lovie Horner, und Anthony Milewski, ein Geschäftspartner Patryns mit angeblich russischen Kontakten im Bereich des Mining, gehörten.„Gerry schien die volle Kontrolle übernommen zu haben“, sagt Andrew Wagner.„Wir dachten, endlich stellt sich Gerry Mike.(…) Das war zumindest unsere Wahrnehmung.“
Patryns Version war allerdings eine andere.Er behauptete, dass er Quadriga verlassen hat, weil er mit Cottens Entscheidung, die Börsennotierung aufzugeben, nicht einverstanden war.

„Gerry beendete die rechtliche und ethische Führung des Unternehmens aus Sicht der Einreichung, nachdem alle Mitarbeiter, Direktoren und Führungskräfte im Januar 2016 ausgeschieden waren“, schrieb er kürzlich.„Wir hatten keine Ahnung vom Ponzi-Aspekt.“ Sind das alles nur wilde Theorien?
Hat Cotten Quadriga genauso wie S&S Investments geführt? Ist die kanadische Bitcoin Börse nichts weiter als ein groß aufgezogener Exit-Scam unter Vortäuschung seines eigenen Todes gewesen?
Es klingt alles fast so, wie in einem Hollywood-Streifen.Auf der anderen Seiten ist es immer noch das Leben, das die unglaublichsten Geschichten schreibt.Wir werden es eventuell nie erfahren.Doch wenn uns diese unglaubliche Geschichte eines lehrt, dann das: Jeder sollte die Verwahrung seiner Bitcoin & Kryptowährungen in die eigene Hand nehmen.Verlässt man sich auf Dritte, setzt man sich immer einem unkalkulierbaren Risiko aus.

Ganz gleich wie legitim und sauber eine Börse erscheinen mag.
If you don´t own your keys, you don´t own your cryptos.
Was hälst du von dieser unglaublichen Geschichte? War die kanadische Bitcoin Börse nichts weiter als ein großes Ponzi-Scheme? Join our chat telegram and share with the experts and the community.In addition, subscribe to our news channel so you will not miss any news.
(Source: Shutterstock).

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