I first heard of Gerald Cotten’s death from an email.

“Gerald Cotten, CEO of QuadrigaCx died about a month ago,” said the message, sent to CoinDesk’s news inbox on Jan. 2, 2019, roughly two weeks before the exchange announced Cotten’s exit from this world.

The email said Cotten only had two employees when he died, neither of whom were responsible for any significant tasks. Cotten alone was responsible for the majority of the exchange’s operations, including the management of its funds and cold wallets.

“His death has been kept a secret because there are no funds and the whole company will collapse if a sell off occurs,” said the sender, who claimed to have attended Cotten’s funeral service but did not identify himself.

I sent follow-up questions but got no response back.

At the time, the story seemed a bit ludicrous and frankly suspicious. CoinDesk’s news inbox receives lots of random traffic, some of which turns out to be unreliable. It could be a hoax, I thought, and the exchange seemed to be functioning. How bad could it be?

Little did we know.

A message sent to Cotten’s still-active email address was not returned. A mutual contact declined to confirm anything. A request to the Nova Scotia Vital Statistics Office also did not turn up any useful information.

Quadriga customers on Reddit and Twitter were complaining, not for the first time, that they couldn’t access their funds. Some were asking why their support tickets were being closed without a resolution. And then, in mid-January, Cotten’s wife, Jennifer Robertson, announced that “Gerry died due to complications with Crohn's disease on Dec. 9, 2018 while travelling in India.” She added: “Gerry cared deeply about honesty and transparency – values he lived by in both his professional and personal life.” She then explained there would be strict limits on withdrawing the exchange’s funds.

Robertson said Quadriga’s payment processor’s bank had frozen its funds, and it was appointing an interim CEO, but, not to worry, the funds were safe and customers could expect to see “improvements to our site and the services we offer” “in the coming weeks.”

A week later, the site went down for maintenance.

Two days after that, it filed for creditor protection.

The next morning, Feb. 1, CoinDesk reported that Quadriga owed its customers nearly $200 million in various cryptocurrencies, and as the email said a month prior, no one could access the exchange’s holdings.

Eleven months on, customers are still waiting for their funds. It looks increasingly like they’ll receive only pennies on the dollar, if that. The Canadian Revenue Agency, the equivalent of the IRS, is auditing Quadriga on the idea that it may not have paid taxes for several years. Miller Thomson, the court-appointed legal firm representing Quadriga’s former users, is working with the CRA and Ernst & Young, an auditor, to see how much cash, if any, Quadriga has left.

Most intriguingly, creditors and journalists, are investigating whether Cotten really died at all, or whether he made off with a fortune and is now living in exile. Just last week, in mid-December, creditors asked police to exhume Cotten’s body and perform an autopsy.

Cotten’s death and Quadriga’s unraveling turned out to be the weirdest story of the year. It also proved an important point: exchanges still crash and customers still lose their money. Never was the old adage “not your keys, not your coins” truer than this year.

I first corresponded with Cotten via email on March 1, 2018, after seeing reports that QuadrigaCX’s users were having issues withdrawing their funds and receiving limited responses from Quadriga’s support staff.

He blamed the issues on a Canadian bank, saying one of his exchange’s payment processors had lost access to its services. He was referring to the Canadian Imperial Bank of Commerce (CIBC), which froze the processor’s accounts due to what it perceived as irregularities in how they were being used.

Claims that Quadriga itself was insolvent were “complete nonsense,” Cotten said.

The ensuing legal fight over the funds continued through the remainder of 2018, with CoinDesk one of the few outlets to cover the story. Billerfy, otherwise known as Costodian, was a payment processor operated by a single individual (Jose Reyes). It held about $22 million in funds owned by Quadriga customers.

Cotten presented Quadriga as a functional exchange that served its customers well. In February 2018, Quadriga processed 200,000 withdrawal requests, of which perhaps 1,000 had been slow due to the banking issues, he claimed.

Nor, he said, did the exchange have any regulatory issues. Cotten said Quadriga had “regular contact with a variety of Canadian regulatory bodies and law enforcement agencies.” Any comments claiming otherwise were likely originated by a jealous competitor, he said.

All told, I exchanged maybe a dozen emails with Cotten in 2018, all related to his fight with the CIBC.

The court ultimately ruled in Quadriga’s favor. But it didn’t matter. It took some time for the funds to be released to another bank, and then even more time for the funds to be accessible by anyone even remotely affiliated with Quadriga. And by then Cotten had died, or disappeared.

By the time Quadriga’s interim leaders announced it was filing for creditor protection, CoinDesk had already built up enough coverage to understand what the full implications might be.

When the exchange did file for protection, we called the Nova Scotia Supreme Court in Halifax, requesting documents spelling out Quadriga’s specific troubles. The court obliged, and CoinDesk learned the exchange was $200 million in the hole, with potentially 115,000 different customer accounts owed money.

This was a Friday. On Monday, I traveled to Halifax to attend the bankruptcy hearing. Meanwhile, another CoinDesk reporter based in India called up the hospital Cotten had allegedly died in, and was able to secure a death certificate (which misspelled his name) and on-the-record comments about his final few hours, either bolstering the argument that he did indeed die, or raising new questions about whether he remains alive, depending on who is asked.

It is about this point when the exchange’s hastily constructed story began to fall apart. Nova Scotia Supreme Court Justice Michael Wood granted Quadriga its civil rehabilitation status, and EY set to work. While users knew about and expected issues withdrawing their funds, and even suspected there might be greater troubles with the confirmation that Cotten was the sole possessor of Quadriga’s private keys, independent researchers began to look into whether the exchange even had the funds it claimed.

Cotten’s presentation of Quadriga as a solvent exchange quickly processing customer withdrawals seems to have been largely that – a presentation.

In actuality, Cotten seems to have been less honest than his wife claimed. He was margin-trading using his customers funds and moving those funds into different wallets. What’s more, he had not set up, or at least moved away from, the multi-signature wallets he claimed to have had years ago, and he was using his exchange’s funds to buy multiple residences, luxury cars, a boat, an island, and a plane. At best, Cotten was a careless late-20s tech bro. At worst, he was a malicious scammer who took advantage of individuals in multiple countries to perform the mother of all exit scams.

And it’s probably even more complicated than that.

The initial story was straightforward: Cotten had died, he was the only member of the company to know what the cold wallets’ private keys were, and therefore the exchange could not access any of its holdings.

Shortly after EY, the bankruptcy trustee, began investigating Quadriga, it found essentially that there were no crypto holdings. Then, by mistake, it sent two-thirds of its remaining bitcoin into inaccessible cold wallets.

EY reported that Cotten had transferred Quadriga’s crypto onto other platforms, furnishing his own personal lifestyle as well as apparently margin trading alternative, small-cap cryptocurrencies. In a two-year period, he apparently appropriated some 9,450 bitcoin, 387,738 ethereum and 239,020 litecoin.

The exchange’s former users did not take kindly to this information.

Posters on Telegram and Reddit vowed to hunt down anyone associated with Quadriga. At least two people affiliated with the exchange described being harassed as a result, though neither would chat on the record.

It seems possible and even likely that Cotten alone was responsible for the exchange’s state at the time of his death.

According to Vanity Fair and the Globe and Mail, Cotten shilled high-yield investment programs as far back as 2003 before starting his own pyramid scheme in 2004 at the age of 15. He first met Quadriga co-founder Michael Patryn, otherwise known as convicted fraudster Omar Dhanani, on the TalkGold message boards.

Both articles note that Cotten was associated with Liberty Reserve, a money-laundering platform shut down by U.S. authorities in 2008, as well as Midas Gold Exchange, which Patryn is affiliated with.

Vanity Fair argues that Cotten is still alive, and that Quadriga’s collapse was only the latest in a long series of successful exit scams. And Nathaniel Rich, the article’s author, is not alone in thinking that. Creditors want to know if Cotten’s body is really in the ground and if he really succumbed to complications due to Crohn’s.

What did we learn from the whole Quadriga saga? The answer, at the moment anyway, is “not much,” and certainly “not enough.”

The first sign that Quadriga was having issues actually came months before anyone bothered paying attention to it. Customers were complaining about withdrawal issues as far back as January 2018. The CIBC froze one of Quadriga’s payment processor’s bank holdings, and any users looking to pull their fiat out was out of luck. Regulators, and the media, had little idea. CoinDesk interacted with Cotten as far back as January 2015 and not until early last year did we suspect something was truly awry.

Quadriga was not a small operation. It was not big compared to, say, Coinbase or Binance, but it was Canada’s largest exchange and held a significant role in the country’s crypto industry as a result. And yet Canada hasn’t implemented stringent regulations on crypto exchanges following Quadriga’s collapse, even though the story has drawn considerable international attention.

Cotten turned out to be a single point of failure for the exchange, and eliminating these single points of failure – individuals, people, who are significant to a company – should be mandatory, experts say. An exchange shouldn’t be shut down because an executive disappears; that’s against the spirit of decentralization.

Quadriga was not the only Canadian exchange to collapse in spectacular fashion last year. Einstein was another. It folded and quickly became the domain of lawyers and regulators, who found that there were, you guessed it, no funds left to return to users. Users trading or storing crypto are now waiting in limbo in hopes that something, anything, can be recovered.

Regulators in British Columbia brought an action against Einstein after it announced its intention to cease operations, but months after Quadriga shut down. Both exchanges suffered from withdrawal issues and customer complaints; both exchanges apparently spent customer funds on non-operational activities; and now both exchanges remain in legal purgatory, with their customers desperately hoping they’ll be made whole.

Magdalena Gronowska, a member of the Official Committee for Affected Users and bankruptcy inspector for Quadriga, said regulators were learning from their mistakes.

“Quadriga should have raised red flags from years of unpaid taxes and many months of consumer complaints – it's no surprise many users feel the government failed to protect them,” she said. “Now fast forward to Einstein, where the British Columbia Securities Commission (BCSC) shut down the exchange after users complained about being unable to access funds. Compared to Quadriga, the BCSC moved very fast to protect consumers and minimize losses.”

The Quadriga story exploded in mainstream publications in a way few other crypto stories do.

The tech press covers some crypto-related stories. Non-tech publications will only cover only a select few. Longread publications very rarely enter the crypto space. Cotten’s purported death and the loss of $200 million in crypto drew the latter sort of attention. NPR, Global News Canada, the Miami Herald, the New York Times, the Washington Post and the Wall Street Journal, all covered it.

News organizations that normally don’t care about crypto were looking for experts to explain how such sums can go missing. Redditors debated the likelihood that Quadriga was a scam all along, while the non-crypto world wondered whether crypto was, uh, safe? Indeed, Quadriga’s collapse cemented a long-running narrative, one that the industry does its best to play down: that cryptocurrency isn’t safe for ordinary people and that it’s used for money laundering and other illicit activities.

Quadriga’s assets are currently being consolidated by EY. An unending series of court hearings provide the only public windows into what it’s collected so far (maybe $30 million), and it remains unclear just how many users are owed. (The exchange said it had more than 100,000 users, but there is no public information on how many have actually filed claims so far.)

Pamela Draper, president and CEO of Canadian crypto exchange Bitvo, told CoinDesk greater regulation could be coming. “It will certainly force players to a minimum standard,” she said, noting that whatever rules are implemented need “to be informed regulation that appropriately understands and covers the risk.”

But crypto holders should conduct their due diligence, Gronowska and Draper said. It is up to us to safeguard our keys. Still, many users don’t. One of EY’s earliest reports indicated a Quadriga account may have held up to $70 million CAD ($53 million USD).

It’s still common for holders to leave their assets with exchanges. A recent Binance report found 92 percent of the company’s institutional and VIP customers were storing funds with the company. Binance, despite its strong reputation, was one of several exchanges which suffered from major thefts in 2019.

We can’t dismiss Cotten as a single solitary bad actor and treat other exchange crises as their own isolated incidents. We need to acknowledge that, in 2019, exchanges continue to suffer from the same issues as ever, and that customers are ultimately the ones who get hurt.

“It's been a very bad year for Canadian crypto exchanges – victims of the Quadriga and Einstein exchange failures lost $250 million,” Gronowska said. “Many new users haven't learned that the risk of losing assets is very real and keep more than they are willing to lose on exchanges.”

As more examples come to light, this may change.

Cotten told me in November 2018 that “operations remain relatively unchanged and we continue to process millions of dollars in payments on a daily basis. Our hope is that everything gets wrapped up in the next few weeks and all of our services return to their regular timeframes.”

Little did we know.

The paintings in this article were commissioned from Trevor Jones, an artist based in Edinburgh, Scotland. Trevor became fascinated with art and tech collaboration soon after graduating from university in 2008. He was one of the first professional painters to incorporate augmented reality. Since 2017, his work has concentrated on cryptocurrency. These original oil paintings will be auctioned by the artist at Bitify.com, with 20% of the sales being donated to two worthy charities, BitGive and the Manny Pacquiao Foundation. Contact Trevor at trevorjonesart.com / @trevorjonesart for more information.