How One Man Made The Perfect Ponzi Scheme

this canadian man enters the 40s hospital in india with intense vomiting diarrhea and then hours later he was dead the next day his body is on his way back to canada local authorities saw nothing suspicious instead they labeled the death as an acute case of gastroenteritis and intestinal perforation but the moment this man died he took hundreds of millions of dollars with him thousands of clients have millions of dollars in frozen assets and along with his death the problem here is also access to his laptop yeah i pretty much ended up losing my life savings because of it his death sparked authorities in the us and canada to scramble to find these millions of dollars and what they discovered blew everyone away now the world is obsessed over his death hundreds of digital detectives want answers to these thousands of questions but one stands out above all the rest what if he isn't dead let's talk about quadringa in today's episode of company forensics so gerald what's your story you were born now you're here what happened in between gerald cotton followed a typical bitcoin millionaire type of persona he was this nerdy introvert who had made it big with crypto but you wouldn't have guessed he was a trailblazer in the canadian cryptocurrency exchange market his company quadrangle fintech solutions ran the kodringa exchange had become one of the biggest in canada as bitcoin surged cotton's fortune increased and he lived he was living in luxury he had yachts and cessna that many called the cadillac of the skies cotton and his wife jennifer robertson traveled the world and lived the good life he also donated some of his money and time to causes and that's how he landed in india part of his mission was to attempt the opening of an orphanage where he had donated eleven thousand dollars for supplies now the couple landed in new delhi on november 30th 2018. and first they went to talk mahal and some landmarks in india and then on december 8th they landed in jaipur and made their way to the oberon hotel one of the most luxurious hotels in that part of india now this place is like a dream destination but for them it turned into a nightmare in a matter of hours as the evening progressed cotton began complaining about stomach cramps he had long suffered from crohn's disease but the discomfort wouldn't subside this time an ambulance rushed him through the streets of jaipur to the private foreign hospital and there things only got worse the severe case of gastroenteritis showed signs of possible perforation staff rushed to move into the icu but failed to stabilize him and at 2 45 pm on december 9th he went into a cardiac arrest so the doctors managed to revive him he flatlined two more times and finally at 7 26 pm on december 9th gerald cotton passed away the hospital staff listed his cause of death as a cardiac arrest due to that perforation and there was no report of something any or anything unusual though it's rare for people to die from crohn's disease two days later on december 11th jennifer robertson and the body of her deceased husband arrived back in canada and the coroner signed a death certificate and cotton was dead but more than 200 million dollars had vanished now the money did not belong to him in the first place instead more than 70 000 people had trusted his exchange with their money now the money was of course stuck in crypto wallets somewhere in the blockchain cotton's death left authorities and crypto experts scrambling to find the money but to the outside world cotton didn't look like a thief what looks can be deceiving gerald cotton grew up in a small town in belleville ontario and loved computers and the internet so there's nothing strange except that he participated in scams since he was 15. in 2003 he arrived at the website talk gold this was a haven of high-yield investment programs that promised ultra high returns with little to no work now these high yield investment programs are more often than not scams they balance taking people's money and keeping up a lie that maintains their trust and this world lured him in and there was no turning back from this under the username scepter he became one of the most active users in january 2004 he had already created his first investment program as ns investments and the promises were worthy of a teenager all i will say is that we will generate your return and that we're not what is called a ponzi or a pyramid scheme in months he had hundreds of unsuspecting investors but he of course had no money and no investment plan so now they were chasing him and he felt the heat if a threat of any kind is made you are stating that you do not wish to receive a refund and you will not receive one and at one point scepter owed money to 235 investors and he never paid it back by may of 2004 sns investments had disappeared and so had this scepter persona and that's when lucky invest appeared and cotton made one crucial mistake here once he answered a question for scepter under his own username and this little mistake earned him this reputation in this shady world so he went into stealth mode and his companies completely disappeared from the earth so while cotton lived in and out of the world of scams and ponzi schemes another player in our story also made headlines that's omar damani omar manny ran a platform called shadow crew which was an online marketplace for stolen credit cards and in 2005 a court found him guilty and sentenced him to 18 months in jail but this would not slow him down so in 2012 the mysterious quadringa fund was born and it promised great returns the name comes from the four horse carriage of ancient rome who were the founding investors and the thing is that nobody knew who they were around this time gerald cotton moved to vancouver which is a city that was becoming this new crypto hub so it seemed like the perfect destination for someone like him cotton even became the director of the vancouver bitcoin co-op and his nerdy personality was very helpful after all he just seemed harmless with a big smile and an ability to explain he lured more and more people into bitcoin at the same time nearing 2013 cotton and a business partner incorporated quadringa cx now this wasn't the same as the quadranga fund which has still operated but had no activity and this quadringa cx got off to a great start in 2013. it was the cheapest the fastest and the safest in the country it was the first exchange to hold a license from the canada anti-money laundering authority so while quadringa cx rose to the top in no time the quadringo fund disappeared in silence there's no evidence still on why and there's also no clear indicator of who ran it or who even created it but let's face it having the same name is too much of a coincidence and it wasn't the only one now new character in this story this is michael patrin he had earned a reputation as the go-to person in fintech at least that's what some articles read plus he teached thai kickboxing he was a personal trainer he was an mma fighter and he had a master's degree in social psychology from the university of california or well that's just what he says anyway he was also active in talk gold and that's where he met cotton and the two would become friends who knew that such a place of fraud could form such strong bonds plus their friendship took them to some interesting places for example liberty reserve was this new digital currency that was gaining strength after it began 2007. it had no anti-money laundering policies or verified information so in short it had all the excellent markings to be a scam as the years passed liberty reserve grew it was massive more than 78 million transactions totaling more than eight billion dollars and people couldn't send their funds directly to buy and sell liberty reserve instead they had to use exchanges which charged fees for these transactions so authorities of course grew suspicious and pounced on the company as well as in those exchanges and what they found is more than 30 exchanges where people sent their money to buy this digital currency amongst them was one exchange called midas gold account and this one had seen more than 5.2 million dollars flow through it on its way to liberty reserve now the owner of the midas gold account was mr patreon but not michael patrion omar patrion and the email which which he had registered the account was geraldcotton gmail.com now omar patreon isn't michael patrion's brother they are of course the same person and this isn't even their original name his name is omar damani who would create quadringa cx with a business partner gerald cotton quadringa cx had a lot of advantages it had speed and cost but it also benefit from a series of events back in 2014 there were a few major crypto exchanges in the world and those that had made it big were in fact massive exchanges but as big as they were they weren't immune to hacking so in one year some of the most important funds in the world had to shut down paving the way for quadringa to became this big name that they were plus cotton was making a name for himself in the crypto world he appeared in podcasts and articles and some even went candid and one he revealed that he kept passwords in pen and paper which would later create an entire myth around him and then there was of course the way he handled business one of his goals was to take quadranga public right when bitcoin's value rose and at the time it kind of made sense so yes things seemed optimistic for quadringa but there was a problem and it was quadringa itself before i go on the story i want to thank our sponsor for today which is chart mogul turmogl is the platform that we actually use on slide beam to track all of our sas subscription analytics our mrr our ar our churn and it's the platform that you need to run your business blanket pro you can use short mobile to measure to understand and to grow your recurring revenue signing up is completely free if you have under ten thousand dollars in mrr completely free and if you have more than that you can use the code slidepin at checkout to get six hundred dollars off through your first year thanks a lot to the turmoil team for sponsoring today's video quadriga not only failed to go public but by june 2015 it had no cash plus it had lost 45 percent of its market share desperate to see their investment pay off investors put in 600 000 of additional capital including 200 000 directly from patreon but it was to no avail it was a sinking ship by early 2016 the entire board in quadranga had quit including patreon but it still handled a lot of money so just like that cotton was kind of left alone in charge of a crypto exchange that was so big that the canadian government grew suspicious and the central bank issued a c trade the c straight ended right when bitcoin was becoming more valuable so the exchange saw around 2 billion in transactions and it profited from every single one of them this was at the time where more and more people wanted in on bitcoin so for cotton things were plain great but what the world didn't know was that quadrangle was nothing more than cotton and his laptop for better or worse three days before gerald cotton and jennifer robertson arrived in india he signed a will the date was november 27 2018. cotton left everything a hundred thousand dollars canadian for the two chihuahuas and he made robertson the owner of his every possession should he die is this common practice yes some people have signed wills before traveling but there is nothing of concern for cotton and then again they travel to india where we know what happened or do we on december 10th one day after cotton died the fortis hospital asked for a no objection certificate this states that there was no foul play in his death and then the hotel rushed to have the body embalmed but the first professional rejected it as it came from a hotel and not from a hospital or from the police so they rushed to a university hospital where a junior embalmer did the job and that same day jennifer robertson checked out of the hotel at 3 30 p.m she paid for the remaining days and flew to new delhi so by the 11th she was already landing in canada with the embalmed body on the 12th a canadian death certificate showed that cotton died in india on the 9th but the death certificate from india actually tells a different story first of all it wasn't until the 13th that the local authority emitted the certificate and yes i know that typos exist but in a death certificate this document is vital and it can't fathom how nobody noticed this little mistake and then on the 14th jennifer robertson called the local manager to help her sell cotton's fancy private plane she explained that her husband had died and that she didn't need the cessna for herself the same happened for the yacht as for quadringo the company actually waited until january 14 2019 to announce that cotton had died and immediately afterwards the website went into maintenance of course the moment the news came out people rushed to withdraw their funds but they just couldn't with the site down and with no more communication from robertson people just got left in the dark by january 31st quadringa filed for creditor protection and the case escalated to higher authorities this means that the person in charge of everything has to sign an affidavit where they swear by certain conditions and that was jennifer robertson the money was the most important thing and she said that she had no idea where the passwords for any of the cult wallets were she did say there was a dead man's switch that would send cold wallet passwords to her and to others in charge but the email never came and that email was the only path to finding again more than 200 million dollars that had gone missing quadringa cx had more than 200 million dollars in its name because bitcoin was on the rise and cotton had made a name for himself but the platform the platform was shaky at best in june 2017 the platform failed to verify a smart contract and it lost 14 million in crypto and it wasn't the only problem they had the platform had no proper accounting system instead it used third-party software to make payments and had no adequate tracking so for example when 67 million dollars came in december 2017 canada's central bank took notice it investigated and it could not track the money back to its owners so it actually ended up seizing 25 million dollars and freezing close to 400 users cotton's name of course took a hit even his relatives were having trouble with banks in canada and things were about to get much worse users rushed to withdraw their funds from codringa but the system was so flawed that it was just impossible in fact it all seemed perfectly flawed scams work at first the high-yield investment program scheme pays some people off to maintain their reputation and then it collapses blaming something like the unpredictability of the investment world as the bitcoin price was collapsing more and more users were desperate to remove their money from the exchange and they just ran into this brick wall a user even sued quadringa for failing to pay back 137 thousand dollars but drink of course never answered back right at this time cotton's life was also taking a toll he grew secluded he stopped seeing friends and family and he made fewer media appearances by november 18 he called the local airport to say that he couldn't pay the lease on the plane so if at this time the quadrangle exchange would have collapsed due to reasons it would have made perfect sense after all it had all the signs of a high yield investment program but that's the thing it didn't it didn't collapse canadian authorities assigned ernst young as a monitor while quadringa sorted everything out what ey found made things even more complicated outside analysis found no evidence that these cold wallets existed at all moreover they weren't convinced that there weren't enough activity to show their presence so another question came up which was where had the funds gone were they stuck or were they just missing altogether and then on january 26 almost two weeks after entering maintenance podrinka was still accepting deposits it only went offline two days after the last transfer which was three days after cotton died and then the weird facts keep piling on top of each other on february 6 for example quadringa sent 350 thousand dollars to a cold wallet by accident it's a cold wallet that no one can access and it of course reminded me of cotton's mistake back with lucky invest and with ss ey did find some of these cold wallets but they had been empty since april 2018 so that's how one man's death enthralled the entire world the media of course ended up loving the case patreon took a beating his dark path came out but he claimed everything happened after he left and in fact he of course blamed cotton for struggling to find work journalists flew worldwide to find cotton when they landed in india the authorities saw no harm done to them cotton was just another death in that hospital but there was the will and the death certificate with the errors and when word got out in canada local contractors rushed to the couple's former home to find a safe or anything where the passwords might be and they of course found nothing authorities discovered that cotton had used als to transfer funds from quadringa to other exchanges and these funds included 76 000 users the case was confusing enough for people even to ask for an exclamation of cotton's body for dna testing and honestly that's something that we might need to see because quadriga is the best example of a ponzi scheme played out to the highest level as for robertson after signing off on kodrina's assets she got 90 000 the wedding ring and the jeep that's it she ended up publishing a book where she tries to clear her name and ends up doing a terrible job she insists that she knew nothing of her husband's work but that's a far claim granted she's trying to rebuild her life but maybe so is cotton if he's out there what do you think you

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Views: 41,661

Keywords: slidebean, caya slidebean, company forensics, caya, startups, startups 101, ponzi scheme, pyramid scheme, what is a ponzi scheme, ponzi scheme documentary, gerald cotten, cotten, quadriga, ponzi scheme story, pyramid scheme exposed, what is a ponzi schemes, ponzi scheme exposed, quadrigacx, quadrigacx documentary, quadriga fraud, quadrigacx lost money, quadriga bitcoin

Id: F6mEqoiU_KE

Length: 17min 29sec (1049 seconds)

Published: Wed May 25 2022