Canadian cryptocurrency firm collapsed due to Ponzi scheme by late founder, regulator says

TORONTO (Reuters) – Canadian cryptocurrency trading platform Quadriga CX collapsed due to a Ponzi scheme operated by founder Gerald Cotten, who died suddenly in December 2018, the country’s biggest securities regulator said on Thursday.

“Cotten opened accounts under aliases and credited himself with fictitious currency and crypto asset balances, which he traded with unsuspecting Quadriga clients,” the staff at the Ontario Securities Commission said in a statement.

He sustained losses when the price of crypto assets changed, creating a shortfall he covered with other clients’ deposits, in effect operating a Ponzi scheme, according to the statement.

Some 76,000 investors from Canada and around the world collectively lost at least C$169 million ($124.2 million)

from the collapse of Quadriga in 2019, the statement added.

Cotten died at age 30 from complications with Crohn’s disease while volunteering at an orphanage in India, according to the Facebook page of Quadriga CX, which announced his death in January 2019.

($1 = 1.3613 Canadian dollars)

Reporting by Nichola Saminather in Toronto; Editing by Matthew Lewis

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