Users of embattled cryptocurrency exchange QuadrigaCX are claiming the wife of late CEO and founder Gerald Cotten sent them deposits directly, contradicting information currently before the courts.
According to statements from his family, Cotten died suddenly in December due to complications of Crohn’s disease while opening an orphanage in India. Quadriga is now seeking creditor protection in Nova Scotia Supreme Court as Cotten’s wife, Jennifer Kathleen Margaret Robertson, claims her husband was the only person with access to $190 million in cryptocurrency stored in cold wallets — a system which stores digital assets offline to avoid hacking — on his laptop. Last week, the company was granted a 30-day stay of proceedings, time to search for the lost funds of Quadriga’s some 115,000 users
In her affidavit filed in Nova Scotia Supreme Court, Robertson said she was not involved in Cotten’s business dealings while he was alive, but at least three of Quadriga’s users claim to have evidence to the contrary, adding even more mystery to a case that gets deeper by the day.
The Chronicle Herald spoke with three separate Quadriga users who provided photo evidence and screenshots that appear to be showing transfers directly from Robertson’s real estate company, Robertson Nova Property Inc. The transfers took place in 2016 and 2017, long before Cotten’s death.
Deposits cast doubt
One user, who provided proof of identity to The Chronicle Herald but wished to not be identified, said they began using Quadriga back in 2015 to dabble in cryptocurrency trading.
On at least one occasion in late 2016 when withdrawing funds from the exchange — around $800 — the deposit into the user’s bank account came from a company called Robertson Nova.
The user said they recently began trading cryptocurrency again after losing interest for a while and had just over $8,000 on the Quadriga exchange when the site went down — funds that are now inaccessible.
Another user received three similar deposits from Robertson Nova in late 2016 and early 2017, and a third user received an Interac e-transfer from an “RNC Inc.” in March 2017 with an email address attached to the name Jennifer K.M. Robertson.
According to a Nova Scotia Royal Gazette entry from 2017, this is around the same time Cotten’s widow changed her name from Jennifer Griffith to Jennifer Robertson. Legal property documents also list her as formerly Jennifer Forgeron, but it’s not clear when that name change occurred.
Those property records obtained through Nova Scotia Property Online show that between 2016 and 2018, Robertson and Cotten purchased four properties, including a large house on 71 Kinross Court in Fall River — which is listed as Robertson’s primary address — as well as several swatches of land: one in Fall River and two in Lunenburg County. Last month Robertson took her deceased husband’s name from the ownership of the four properties, took out collateral mortgages on all four in favour of a trust called The Seaglass Trust where she is a trustee, then transferred ownership of at least two of those properties to that trust — moves lawyers told The Chronicle Herald were likely aimed at protecting those assets from future creditors.
An additional 12 properties in the Halifax metro area worth over $6 million — also purchased between 2016 and 2018 — are listed as belonging to Robertson Nova Property Inc. According to Nova Scotia’s Registry of Joint Stock Companies, Robertson is the director, president and recognized agent of Robertson Nova Property Inc. and Robertson’s Kinross Court address is listed under the company’s contact information.
Did QuadrigaCX even have the cryptocurrency?
Keegan Francis, a Halifax-based blockchain expert and co-founder of Atlantic Blockchain, an education, consultation and contracting firm, said cryptocurrency exchanges keep an internal database of the addresses where funds are stored.
But, Francis said, unlike with a cryptocurrency wallet, on an exchange the user does not have ownership over that address.
“All an exchange does is pair buyers with sellers. If I wanted to deposit my one bitcoin … Quadriga would list or pair me with a seller who wants to buy my one bitcoin … so, much like a stock exchange works,” he explained.
The way exchanges like Quadriga make money is on the transaction fees associated with those trades. In theory, if someone wants to transfer their money back to Canadian currency and withdraw, it should still be accessible at that address.
Why Quadriga would have used Cotten’s wife’s company to pay customers is unclear.
“I suppose that they could have been irresponsible with the funds, so if I deposit my Canadian dollars and they decide to do something else with it and lost a portion of, then there’s an imbalance of funds on the network and they need to start moving their funds around to account for that,” Francis said. “For example, (if) I were to deposit $5,000 CAD onto the exchange and they trade that for bitcoin because they’re expecting bitcoin will rise the next day and trying to make a buck, but then bitcoin falls then they are out the amount that bitcoin has fallen and they need to come up with that cash in case someone requests that cash get withdrawn.”
There has been much speculation about whether or not Quadriga ever had the missing $190million in cryptocurrency — some analysts have told media there is little evidence of these alleged cold wallets. This, coupled with Quadriga’s past liquidity issues and CIBC freezing $25.7million of Quadriga’s funds last year, and the fact court-appointed monitor Ernst and Young said the company inadvertently transferred $468,675 of the $902,743 it was holding in hot wallets into inaccessible cold wallets just a day after it was granted a stay by the courts, has caused conspiracies to run rampant.
The creditor protection case was back before Nova Scotia Supreme Court on Thursday.