The Bizarre Disappearance Of A Canadian CEO - An Unsolved Mystery

today's video is brought to you by audible perhaps the most common question i get asked here on this channel is where i find my topics for my videos and while i've stumbled across a good amount of stuff online by far the most consistent way that i've been able to digest complicated and interesting cases has been through audiobooks i listened to final destination disaster in regards to flight 980. i listened to the book of satoshi and referenced it a lot from my satoshi series and finally in regards to my silk road video i highly recommend a book by the name of american kingpin by nick bolton there are just certain topics that are best enjoyed when you can actually sit down and dedicate time to the intricacies of a story and for someone like myself who finds it very hard to just sit down and actually read a book i highly highly recommend audible audible has by far one of the best selections for audiobooks to keep you entertained for hours as the audible plus catalog includes thousands of audiobooks exclusive audible originals and podcasts on a variety of subjects and finding a good rabbit hole to go down is as simple as going to the mystery or true crime section with all of that being said try audible absolutely free for 30 days by going to audible.com sociable or texting sociable to 500 500. once again that's audible.com sociable or text sociable to 500 500 and thanks once again to audible for making this video possible in the world of cryptocurrencies if there's something i've learned it's that no company no matter how legitimate they may seem is above turning into a completely full-blown ponzi scheme or scam due to the gray area of the industry and varied methods of skirting regulation it's honestly no wonder you have a new form of criminal activity from that space popping up daily but that being said the mystery we are going to be exploring today is by far one of the least talked about yet one of the most insane stories from the industry and i must say you know you're in for a treat when you have even the crypto promoters who rarely say anything negative say something like this when most of my no coiner friends ask me what is one of the most egregious frauds i know about i usually say fractional reserve banking however i often sense that this is not the answer that they're looking for but guy you deal with crypto all the time tell me about some cryptocrime with a slight frustration i tell them to google quadriga cx with that being said today let's dive into the mysterious death of gerald cotton and the bizarre circumstances surrounding canada's ex-largest cryptocurrency exchange quadriga fintech solutions canada's largest cryptocurrency exchange is in hot water and thousands of clients have millions of dollars in frozen assets with little information one of canada's best known cryptocurrency exchanges says it does not have access to 190 million dollars worth of customer funds and is seeking creditor protection parent company of the bc based quadrica cx says it lost access to the cryptocurrency after the death of its 30 year old ceo gerald cotton in december for everyone involved that as it relates to gerald cotton and cadriga the guy is still alive so this is a total like 450 of 550 000 right today we announced charges in what may be the largest international money laundering case ever brought by the united states [Music] the beginning of the story begins with a canadian man by the name of gerald cotton a seemingly friendly looking and clean-cut canadian business student who was studying a business administration at the schulich school of business in toronto cotton was regarded as charismatic soft-spoken and suspiciously wealthy he was notorious for carrying large sums of cash with him wherever he went and paying for things flat out never financed according to an outline.com article the guy had more money than he knew what to do with said eric schletz who got to know mr cotton at a small flying club in nova scotia i've seen gary walk through an airport with 50k in cash that's the scale of the money the guy had he was a very reasonable person but if he was going to spend the money he was going to buy something nice and while the majority of his lavish spending habits would occur sometime after he graduated college it's worth noting that his jet set lifestyle was seemingly only built in a matter of a few years [Music] and the assets included in his fortune were included but not limited to 16 properties in nova scotia a cessna 400 plane a 600 000 yacht and of course a brand new lexus and while you'd expect some grandiose come-up story for someone who was doing so well for themselves getting back to our timeline after cotton's graduation in 2010 not much is known for certain and there's a mysterious three-year gap right after he graduates until his work history begins in 2013. during this undocumented and mysterious time however what we can say for certain he learned about bitcoin he moved to vancouver from toronto and the last thing is that he met his new business partner michael patrin in november of 2013 cotton appeared fresh in the workforce not an entry-level job but co-founding in front running a cryptocurrency exchange business by the name of quadriga as a ceo and michael patrin as the co-founder now what i want you to keep in mind is that starting a money exchange business requires a good amount of capital and michael patron's work history didn't really suggest a lot of prior traditional success we'll talk more about patchat in a bit but just know for now he did not fund the entire thing nonetheless quadriga cx started its operations in vancouver canada at an opportune time bitcoin had just become a household name due to the popularity and closure of the silk road and this new form of online narcotics trade had made it a scramble to see which dark web market would rise to prominence next however this wasn't the only reason that quadriga was successful the other major factor here was that the largest bitcoin exchange prior was mount gox and during this time they had lost about 850 000 bitcoins belonging to their customers the timing here could not be more perfect as this happened in february of 2014 and quadriga had launched their online platform just a month prior and after the success of their online platform they quickly rose to capturing a total of 80 of the market share in canada over all of the other cryptocurrency exchanges and while on the surface the company looked to be a smooth operation if you were to look deeper into the details regarding the company and the people surrounding it you could see hints of something far more sinister while on the surface quadriga could be seen as a successful business shaping up into its maturity if you knew the reality of what was going on behind the scenes it wasn't so much a business as it was cotton just manning the entire show from his macbook cotton was the sole custodian of all of the cryptocurrency funds on the exchange and the company itself had no proper accounting software or any proper way of tracking funds or its success and basically anytime you tried to pry for details within this company it would only get more and more suspicious for instance one of the main ways for users to withdraw money out of the exchange was to meet at a non-descript location where they could pick up cash furthermore quadriga didn't have any actual business bank accounts due to the fact that no regulated bank would be able to have a client that deals in cryptocurrency due to the posed risk for money laundering among other regulatory issues and instead quadriga had to use other methods for shifting money around including a platform credit system that whenever money was deposited into the exchange you wouldn't actually hold one dollar on their platform but rather you would be credited one quadriga buck to which this could be used to trade equally on the exchange and the reason for this is that if you were to deposit money into the exchange and then buy straight into bitcoin that would be a money transmitting business and by using this quadriga buck token that was on the platform they would technically be selling you a token and not transmitting money moreover when money was wired into quadriga it wasn't into quadriga's bank accounts but rather the money would be wired into various shell companies where the banks were unaware of what the transactions were actually intended for aka money laundering here is a list of all of the payment processors they used and two of these were owned by employees of quadriga and this shell company was owned by gerald cotton's wife now as you can imagine it's a lot easier to get a bank account for a cryptocurrency exchange if the bank doesn't know what you're actually doing with it but we're really only scratching the surface with the amount of sketchy money that was involved in this company the most notorious payment processor on that list was one by the name of crypto capital corp crypto capital corp was another payment processor that basically had ties to the entire crypto industry crypto capital corp acted as a unregulated shadow bank to help move laundered funds into a variety of accounts as well as providing wires for cryptocurrency exchanges various people involved in these schemes would set up companies registered in panama where all that it was needed to start a company there was a panamanian citizen to sign off as a registered officer to which the real ownership could be obscured due to the strict privacy laws there in crypto capital basically set up an entire network of these types of shell companies it's worth noting that the registered officer or the panamanian citizen that was on the variety of these shell companies associated with crypto capital was a man by the name of ivan manuel molina lee and it's also worth noting he was later arrested in 2019 in poland for laundering about 390 million dollars from colombian drug cartels using the cryptocurrency exchange bitfinex and while we'll get back to crypto capital in a moment let's get back to quadriga in 2015 the company was seeking to go public on the canadian stock exchange and michael patron's role in this entire ordeal was basically to help bridge those connections to get the company to go public to which his share in quadriga would help him make a return on his initial investment but that was assuming that quadriga was actually able to be successful as a company because at the end of 2014 things were not looking good for quadriga and the company had actually suffered a 90 000 net loss with only 22 000 in revenue now considering how poorly records were kept it's hard to say how factual this actually was but as it appeared to michael patron and other investors in the company quadriga was running out of money and as a result in february of 2015 michael patrin would raise capital for the company by seeking out additional investors and putting an additional 150 000 into quadriga himself and 700 000 from other investors with another round of funding around march of 2015 quadriga announced that it would go public through a reverse takeover of another company by the name of whiteside capital however throughout this year quadriga would continue to burn through all of that investor capital leading to a breaking point in december of 2015 where overnight gerald cotton would fire basically everybody from the company including their regulatory attorney because on one of those december nights gerald cotton would sit at his laptop and decide to take the company down a lawless path it was around this time that cotton would log into quadriga and create an account by the name of chris markey and what i want you to keep in mind is that since he owned the back end of the website he could credit this account with 1 million fake dollars to which he would then go on to buy 1700 bitcoin with that fake money by february of 2016 michael patrin had decided that he wanted to cut ties with quadriga and cotton altogether this was after cotton had told him that he did not want the company to go public anymore and a month later the british columbia securities commission had banned quadriga from going public altogether after they'd failed to submit a proper financial audit by march of 2016 quadriga is now a one-man show and gerald cotton would continue to operate with zero oversight and during the same time cotton would go on to fire his money printer up again buying a 370 000 ethereum and furthermore the bitcoin that he had bought with his fake dollars he had then transferred on to another exchange and sold it for real money fast forward to 2017 and the crypto boom is in full swing more and more customers are flocking in and wiring money into unregulated exchanges this means that the companies like crypto capital corp and their various network of bank accounts all around the world that are being used to wire funds to customers are going to start picking up more volume this would make it only a matter of time before governments would notice and would start freezing accounts that were tied to money laundering and around june of 2017 cotton had decided that he wanted a bit more money he fired up his money printer again and decided to credit his account a hundred million fake quadriga dollars and he would continue buying up all of the cryptocurrency on his exchange as june of 2016 would continue on cotton was using these funds to trade against his own customers according to the ontario securities commission 95 of the trading activity that took place on quadriga was done through chris markey meaning that when you logged on to quadriga you were quite literally trading against someone with a unlimited credit line and the people responsible for covering those losses were other customers on quadriga this essentially turns the exchange into an insolvent ticking time bomb that will explode the moment new investors stop coming in and people begin to cash out aka a ponzi scheme fast forward to december of 2017 bitcoin has reached an all-time high of 20 000 per coin this is all while quadriga has continued to struggle to keep up with demands users on reddit begin experiencing delays with their withdrawals money is getting congested and the third-party payment processors that are fraudulently wiring money to these customers are starting to draw more attention throughout this time another shell company processor by the name of custodian just had 67 million dollars pass through its small business banking account cotton had worked with a man by the name of jose reyes to set up these extra accounts to process more money and around december of 2017 reyes got a bit tempted and decided to transfer 2.3 million dollars to his own personal checking account this signals the canadian bank who just saw a massive deposit to look into where it was coming from on january 8 2018 the canadian bank freezes that account canadian officials begin questioning reyes as to who is the proper owner of the remaining 23 million now the start of 2018 the bitcoin price has just started to go down more sellers mean more people cashing out january 2018. gerald cotton prints another 50 million and credits his chris marquette account january 17th 2018 the infamous bit connect ponzi scheme has just popped users are scrambling in a race to the bottom to get their money out of the bid connect token cotton is now scrambling to fulfill redemption requests bringing on employees to help with the congestion if you recall those shell companies from earlier this is when cotton seems to become desperate recruiting a former customer service rep for his company to open a bank account and run money through march 2018 canadian officials send an email to cotton questioning the usage of the funds found in reyes's account cotton never responds to the email meanwhile in america in april of 2018 traffic sting has just taken place on a website formerly known as backpage seven individuals are charged in relation to the sting as a result the backpage ceo ends up getting charged as well backpage's ceo pleads guilty to money laundering and conspiracy to facilitate institution backpage's ceo agrees to cooperate with the investigation and as it turns out a backpage was using capital corp as a payment processor too as a result the us's investigation stumbles upon a network of accounts tied to crypto capital via the back page seizures the domino effect is in full swing and across the world polish authorities have just arrested ivan manuel molina lee and seized 390 million that was being laundered for the colombian cartel crypto capitals cover has been completely blown and the u.s authorities have just seized a total of 850 million dollars across the network of bank accounts including all the money that quadriga had sitting in that shadow bank bitcoin's price is down 65 percent and with crypto capital unable to process payments for quadriga gerald cotton can no longer keep up with deposits it's only a matter of time before people realize he's been siphoning money off the platform gerald cotton's time is running out by mid 2018 quadriga is acting as a direct revolving door new customer deposits are being used to directly fund withdrawals and there's no new money to keep the scheme going users on reddit are demanding they receive their withdrawals and are being given excuses like canada's banks are the ones responsible for the delays overall cotton has effectively stripped the platform for hundreds of millions by using unlimited amounts of fake dollars to trade against his customers and not only that he's also spoofed his customers balances and sold them fake cryptocurrency as well to visualize just how bad the situation had become this graph was prepared by the ontario's securities commission and after a thorough forensic investigation it's believed that around january of 2018 around 180 million was actually left on the exchange and the outstanding liabilities were around 900 million by 2018 cotton knows he can't keep this up much longer and he needs to buy time to escape his responsibility and in march of 2018 he ended up depositing 24 million back that he had stolen from august to december cotton transfers an additional 10 million that he had taken for himself just to make it seem like a good faith effort was going into getting money back and on october 8th 2018 cotton would get married to his longtime girlfriend and just a month later cotton would sign a will leaving all of his belongings and all of his shares to quadriga to his wife three days after signing his will cotton takes him and his wife to india to which the purpose of this trip was apparently twofold the first eight days were to celebrate their honeymoon and the final four days are supposedly to help set up and finalize an orphanage they'd sponsored and on december 8th 2018 at 5 15 pm khan and his wife would land in hapur india and just after checking into a four night stay at their hotel by the name of oberoi raj villas cotton would supposedly get sick and then taken to fort escort's private hospital and a day later he apparently dies from complications related to crohn's disease with the official cause of death being cardiac arrest and i want to add that dying from crohn's disease itself is very unlikely however there are certain complications that can occur and despite the uncommon circumstances for his death that's not what makes me doubt the story because apparently it's fairly easy to get fully registered and signed fake death certificates in india in a report done by the science channel in 2013 they video themselves going undercover to buy a death certificate that was fully signed by the local registry and fully authenticated and the events that occur after cotton's death are even more suspicious on december 10th the doctor of the mahatma gandhi medical college refused to process an embalming certificate for cotton basically because a hotel representative showed up and claimed that they had a dead body back at their hotel and she also stated that any time bodies were sent to her from fortis hospital they were sent in an ambulance and instead cotton's body was allegedly taken to the sms medical college to which they're the ones who processed the embalming certificate and asked fewer questions according to the globe and mail the person in charge of the anatomy department there didn't even see the body and the embalming certificate was processed by a junior staffer and finally a death certificate received by the globe and male lists his death place as the oberoi rajvilas while a later death certificate that was obtained by coindesk lists the place of death as fortis hospital and if that wasn't enough the name on the death certificate was even misspelled naming him as gerald kottan and i want you to keep in mind that taking a body back in a plane requires extra paperwork for one you need the death certificate but we know that gerald cotton's wife had left on december 10th as she checked out at the oberoi at 3 04 pm and she also wrote an email to the orphanage stating that the couple could not attend because gerald cotton had died and she had to bring the body home is there anything i should be aware of when opening this bag anything sharp and it'll pop out at me just so i know oh just my dead husband eh your dead husband yes do you have any paperwork to go along with this on oh no and on december 14th back in canada a closed casket service was held and he was subsequently put into the ground and perhaps the most selfish part of this whole story is the fact that the orphanage didn't even have enough money to actually finish setting up as cotton's donation didn't build an orphanage it only provided enough for the materials and that operator was forced to take on debt equivalent to seven years of his income and moreover cotton's widow didn't announce his death until over a month later when she would finally update everyone as she would write jerry cared deeply about honesty and transparency values he lived by by both his professional and personal life he was hard-working and passionate with an unwavering commitment to his customers employees and family and that it was around this time that people stopped being able to pull their cryptocurrency out of the exchange to which the company would list a notice that they are now pausing operations and up until this time people were still allowed to deposit into quadriga meaning that people depositing towards the end of quadriga's existence didn't realize that they were depositing their money in to cover spoofed assets that were sold before and on january 29th she would take cotton's name off the ownership of four properties and would take out collateral mortgages on all of them and place them in a separate trust to which she was the sole owner and this would protect those assets from creditors this was all while none of the customers knew that quadriga was insolvent and on the 31st the website would finally announce its bankrupt with their inability to pay out customers being that this was some completely unforeseeable event and that gerald cotton only had enough foresight to leave a hundred thousand dollars for his chihuahuas but none for his very legitimate business so tell me your reaction when you found out that the ceo had died and taken the passwords with him uh i'm not sure if uh the you know it's the true story you never know um right because there's there's some people suggesting that maybe he's not dead is that what you mean yes yes there are some theories of course they're just theories we don't know for sure um i think it sucks that a lot of people lost a lot of money you know obviously i'm not as affected as others who have lost much more but uh it's still it sucks that i i thought i could trust it because it was a canadian service based in vancouver and uh i guess that didn't work out the media latched on to the story just being as simple as they had a bunch of money and they just didn't have the password for it but that just wasn't the case we do know for a fact from the investigation that the cold wallets that were used to store cryptocurrency were emptied as far back as april of 2018 right around the time that crypto capital had their accounts seized and it's worth noting that the exchange kraken has posted a hundred thousand dollar reward towards any information that helps them find out what happened to those funds according to the claims filed on behalf of quadriga 25.6 000 bitcoin 11 000 bitcoin cash 11 000 bsv 35 000 bitcoin gold and 430 000 ether are missing in relation to kudriga's cold wallets and at the time of me making this video the total sum of all that currency i just listed is around 1.85 billion dollars still missing and while you might expect this video to end here with a couple speculations from me if you recall at the beginning of this video i mentioned a suspicious three-year gap in cotton's work history so what was cotton doing prior to quadriga and how did he have all that money to fund the entire thing in the first place and what do you believe is the factor that brought you guys from where you started to how big you guys got so one of the differences between quadriga cx and a lot of our competitors is that i come from a background where i've dealt with digital currencies in the past so i know the challenges that bitcoin exchanges and any sort of digital currency faces i think a lot of people don't understand that bitcoin and digital currencies aren't necessarily a new concept and often the same schemes are repeated throughout history some people might question how did cotton think to do all this at such a young age but in reality he was involved with it for much longer than you'd think for one michael patron and gerald cotton likely met doing previous business and cotton's admission stating we have a lot of experience with digital currencies and the challenge they face is probably one of the few truths the guy ever told in regards to michael patron and quadriga it does appear that gerald cotton turned his back on patron but it's also worth noting that michael patron has changed his name but he was formerly known as a man by the name of omar dahani and he changed his name twice because he was a convicted felon that laundered money for an identity theft ring by the name of shadow crew patron got his start accepting western union money orders and he would mix your money with a digital currency called egold that once again accepted bank wires in exchange for the token consequently patron was deported from the us and it seems that he started working on something called m gold exchange with gerald cotton another currency exchange that was around in 2008 and there were quite a few options for digital currencies at the time one of the larger currencies before bitcoin was liberty reserve and the premise was simple one dollar was one liberty reserve and you could send money to anybody else who had an account on the network for a small fee that would go to liberty reserve or they would take one percent on all transactions however liberty reserve could only be traded through exchanges where they would take a fee the main difference here between this and something like paypal is that you didn't need any identity verification or any kind of regulation and just needed an email and the company which operated out of costa rica grew to a million users by the time it was shut down to which when it was shut down it was labeled as the largest money laundering case in the united states history as you can imagine liberty reserve brought forth all of your usual activity and when the us finally seized liberty reserve it resulted in a massive data dump that showed all of the accounts and their balances on the network going through the government exhibits the connection to cotton and patron is visual within one of the millions of accounts in the row containing mgold.com you can see the first and last name omar patron and the email account gerald.cotton gmail.com this account contained a balance of 5 million liberty reserve and liberty reserve shut down in 2013 and it just so happens that cotton and patron would found quadriga later that year and wait there's more because cotton also had multiple accounts on quadriga to which his main alternate alias was scepter that linked to a extensive scamming history including a forum dedicated to ponzi schemes by the name of talk gold to which patron was friends with a user by the name of scepter and scepter joined tot gold in 2003 meaning that he was likely in his teens when he started doing this his past scams included a ponzi investment program by the name of lucky invest and s s investments which can all be found on the closed scam section of talkgold and these services claimed to offer 103 returns in 48 hours and it appears that cotton's history also included shilling services basically you would pay him money and he would go on a bunch of stock puppet accounts and make your investment scheme seem legit this all ties into a black cat forum account by the name of murdoch1337 where he made a post stating in 2012 that he was looking for a programmer who was familiar with bitcoin to develop a website that was very similar to bitstamp and you can find ads on another website where he left his skype name for the exact same purpose the skype name was jerrywc or scepter countermail.com murdock 1337 is gerald cotton and it just so happens that his black cat world account was active august 2019 long after ya boy was in the ground so either this was some investigation looking into this account which i doubt or mr cotton didn't actually pass away if so where is he right now i'd love to know what you guys think because there are quite a few people that are looking for him especially if it means redeeming the hundred thousand dollars for the details of the funds i guess only time will tell if gerald cotton will come back from the dead this is really sociable have a good night [Music] [Music] you

Channel: Barely Sociable

Views: 764,893

Rating: 4.9554 out of 5

Keywords: documentary, unsolved mystery, mysteries, investigation, barely sociable, dissapearance

Id: NMDZcbkgpJA

Length: 30min 24sec (1824 seconds)

Published: Sun Feb 28 2021

Reddit Comments

[u/Ordinary_investor]

Wow, thanks for researching this topic, i am just about to watch this episode, can not wait!

Also, as a side note, if Barely Sociable happens to read this comment. Perhaps (as by now you have done now quite a few very interesting topics on crypto currencies) consider doing a multi episode research and videos on the topic of tether treasury, from its inception all the way to nowadays, how it is arguably the biggest scam since Bernie Madoff scandal, eclipses it by far really and how it has inflated biggest pyramid scheme of all time currently with ~1.5 trillion market cap. There is a lot of research although, that goes into this spiderweb of a scam, not sure if even you can crack this through all the way, but out of everyone out there, because of your superb track record on things, your audience reach, the possible near future fallout from tether NYAG investigation etc., i think that would certainly be, so to say, Barely Sociable worthy story for you to research into. Please consider this, as perhaps most importantly, your reach would save A LOT of people from inevitable financial ruins that this asset class will inevitably cause. I personally would not mind at all to actually support your/ this cause financially, as it needs to be heard to a larger audience, as it has run rampant for far too long.

[u/saltytrucker1309]

Great video as always

[u/KINO_OBMAN]

Anyone know which song it is playing at the beginning of the news article clips?