The bankruptcy and subsequent closure of the QuadrigaCX cryptocurrency exchange were caused by fraudulent actions by its founder Gerald Cotten. This is evidenced by the results of the investigation of the Ontario Securities Commission (OSC).
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The regulator studied data on 368,000 accounts and the exchange’s financial transaction history. As a result, the total damage among tens of thousands of customers was estimated at least $169 million. OSC called the actions of the head of QuadrigaCX an effective Ponzi scheme.
Cotten opened accounts under false names with fake balances, and then made transactions with real users. In fact, he created Canadian dollars from the air and bought real digital assets on them. When the affected customers withdraw funds from the exchange, he compensated for their balances from deposits of other customers.
The regulator added that Cotten spent millions of stolen dollars to maintain a luxurious lifestyle.
The Commission added that the balance of the exchange funds will be distributed among the affected investors under the supervision of the court.