
Ponzi Schemes, Private Yachts, and a Missing $250M in Crypto: Quadriga - SirLJ
https://www.vanityfair.com/news/2019/11/the-strange-tale-of-quadriga-gerald-cotten
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NelsonMinar
With this much fraud in the founders' background surely the benefit of the
doubt about the disappearance of $250M and the founder shifts from "gosh what
bad luck" to "there's malfeasance involved here".

But the one thing that gives me pause is a Globe & Mail investigative piece
confirming Cotten's death. They looked hard, in India, and the story held up.
Then again maybe the reporters just got hoodwinked.
[https://www.theglobeandmail.com/world/article-how-did-
gerald...](https://www.theglobeandmail.com/world/article-how-did-gerald-
cotten-die-a-quadriga-mystery-from-india-to-canada/)

~~~
Lazare
Well, yes. The original story ("Cotten was honest, Quadriga was on the up and
up, Cotten just randomly died and weirdly was the only one who had access to
the funds") has been disproven ten times over.

So no, no benefit of the doubt here; obviously there was some sort of scam
going on. The question is, what? There's a lot of possibilities! And a lot of
them would involve Cotten being really, truly dead, so the Globe and Mail
investigation, even if accurate, doesn't narrow things down much.

------
lightedman
I've been in prison and my first thought here is "Absolute Fraud."

My first thought for cryptocurrency when it first came out was "Oh, look, easy
money if I felt like throwing my scruples and morals aside and actively
participate in this!"

I'm still broke, so obviously I didn't sell myself out. Meanwhile many others
I know who got involved in this are now facing IRS Audits and in one case
criminal charges.

I'm somewhat glad my foresight saved me from ever making more than like
fifteen cents and a couple 'free' pizzas off of this stuff years and years ago
and getting potential charges. Knowing the disasters of a distributed database
that works without explicit human permissions and checks like what we did in
the late 70s, I dodged a big bullet, IMHO.

~~~
seibelj
I’ve never been to prison and cryptocurrency and blockchain have been my
career for the past 4 years. Not sure we should be taking advice from your
anecdotes. There is nothing illegal about cryptocurrency - New York even
issues a Bit License specifically to allow it. Maybe you should read more
about the industry?

~~~
exogeny
Crypto reminds me so much of the dot-com boom in the late 1990s. Massive
amounts of interest, amazing and potentially life-changing innovation, overrun
with fraud they completely obliterates public confidence.

I’m not a big crypto guy, but a lot of the problems of it seem to be baked in:
the decentralization of it attracts a slew of Libertarian types who believe
that if someone gets scammed, it’s their fault. There has to be what,
thousands of coins? How many are legitimate operations?

It sucks because the promise of the technology is held back so much by all of
this fraud, and from what I see, people are so reticent to call it what it is
because they’re financially tied to the sector. But there is really zero
public confidence in this space - and even less in terms of realistic use
cases for everyday people - that stories like this feel like another nail in
the coffin.

~~~
Nuzzerino
Even the legitimate operations are overrun with incompetence. The lack of
accountability and easy fundraising is a recipe for charlatans who have no
business running a business.

~~~
hanniabu
You need to pay less attention to the ones that are running it like a business
and more attention to the ones that operate as a decentralized organization
building an open protocol.

~~~
Nuzzerino
Those projects tend to be fine until they get a marketing team, at which point
they're a business no matter what they call themselves. I agree in principle
though.

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EddieCPU
How could anyone be taken in by these kind of shysters and keeping your coins
in someone else crypto-exchange kinda defeats the whole concept.

~~~
nikanj
For the vast majority of late-game investors, the whole concept was ”You put
in $100 and make $10,000,000”

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TaylorGood
What a read! Love long-form journalism. Too many indicators that he planned an
exit and is still alive.

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elliekelly
> He neglected to disclose, however, that he filled those fake accounts with
> invented funds, trading counterfeit Bitcoin for real Bitcoin and Canadian
> and American dollars.

What is “counterfeit Bitcoin”?

~~~
arthurcolle
Could be "ledger entries" in the crypto exchange's database with no real world
corresponding BTC on the actual Blockchain.

Imagine you log into an exchange, deposit another crypto like LTC, exchange it
for "BTC" and never actually withdraw it. how can you be sure that there is
actual BTC behind your account?

~~~
damian2000
Exactly - done in order to fake volume - so it looks like your exchange is
doing a lot more business than it really is. Also to manipulate the bitcoin
price on your exchange, although it would be difficult to make significant
moves due to arbitrage.

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neonate
[http://archive.is/IEKmz](http://archive.is/IEKmz)

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lobster45
How many times had this happened? The exchange in Japan and many others had
issues

~~~
Scoundreller
Why limit your scope to crypto? This kind of thing has happened long before
it, and will happen again and again.

It's probably happening right now.

