QuadrigaX CEO Widow Will Return C$12 Million to Settle Creditor Claims

gerald cotten quadrigacx exchange Gerald Cotten, CEO, QuadrigaCX CEO

Jennifer Robertson, widow of defunct Canadian cryptocurrency exchange QuadrigaX CEO Gerald Cotten, is planning to return C$12 million (approximately $9 million in US dollars) worth of assets from his estate to settle investor claims. The exchange owed $195 million to investors, out of which C$190 million (approximately $146 million in US dollars) was in cryptocurrencies.

According to a Bloomberg report, assets excluded from the settlement are C$90,000 in cash, C$20,000 in registered retirement savings plan, a 2015 Jeep Cherokee, Robertson’s wedding band and jewelry, C$15,000 in personal furnishings and Quadriga shares.

“I have now entered into a voluntary settlement agreement where the vast majority of my assets and all of the estate’s assets are being returned to QCX to benefit the affected users,” Robertson stated. “These assets originally came from QCX at the direction of Gerry.” She said the settlement would allow her to move onto the next chapter of her life.

A Curious Case

The settlement could potentially signal an end to a curious case, the first of its kind within the cryptocurrency ecosystem.

QuadrigaX was started in 2013 by Gerald Cotten and grew to become Canada’s largest cryptocurrency exchange. According to reports, his cofounder Michael Patryn was an ex-felon named Omar Dhanani who’d been deported to Canada after he was found guilty of identity theft. Robertson also changed her surname twice in 2016 to purchase real estate in Nova Scotia.

The irregularities in personal histories of its founders did not prevent QuadrigaX from becoming a success in the swell of cryptocurrency markets. In a 2016 interview, Cotten claimed that approximately 80% of all bitcoin trading transactions in Canada occurred on QuadrigaCX. He became a multimillionaire and purchased several assets by siphoning funds from the exchange towards his personal accounts.

According to the latest trustee filing, Cotten and Robertson had “significant” cash holdings, owned 16 properties in Nova Scotia, real estate in British Columbia, vehicles, a sailing vessel, and a personal aircraft. The report also stated that the couple “incurred significant personal, living, and travel-related expenses.”   

A Problematic Downturn in Crypto Markets

When cryptocurrency markets tanked in early 2018, investors were unable to redeem their holdings and the exchange became embroiled in a lawsuit with a Canadian bank.

Cotten died during his honeymoon trip to India last year. He’d made his will a month earlier, bestowing financial assets to his wife, the sailboat to his parents, and the personal aircraft to his brother. Robertson claims that only he knew the exchange’s private keys, which are used to access cryptocurrency holdings, to retrieve investor funds. This made it impossible for her to return cash owed to the exchange’s customers, she claimed.

But the exchange’s investors filed a lawsuit against it. Subsequent investigation revealed more irregularities in its accounting. For example, auditing firm Ernst & Young found that $100 million worth of cryptocurrencies had disappeared from the exchange’s books. Five of the six cold wallets, or wallets that are disconnected from the Internet, used to store the exchange’s cryptocurrencies have been empty since April 2018. In August, a judge in the case approved an award of $1.6 million in fees for firms involved in the recovery of funds from the exchange.   

However, Robertson claims that she was not aware of Cotten’s illegitimate activities. “I was upset and disappointed with Gerry’s activities as uncovered by the investigation when I first learned of them and continue to be,” she stated yesterday.