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Quadriga was one of Canada’s biggest cryptocurrency, before falling into deep trouble and eventually declaring bankruptcy and the possible faking of the CEO’s death. In this article we will see what led to this, and whether Quadriga had scam like traits. Quadriga, was started in 2013, in Vancouver B.C by Gerald Cotten of Belleville, Ontario. Quadriga was started by Cotten and Michael Patryn, initially doing only local trades, and opening Vancouver’s first Crypto ATM. By 2014, they were trading Bitcoin worth 7.4 Million CAD on their exchange. The company had raised 800,000 CAD after announcing plans of getting listed on the Candian Securities Exchange, but backtracked on that decision in early 2016. What’s interesting is that Quadriga had reportedly ran out of money by July 2015.
Talking about the origins of the company, let’s look at the two founders one by one. We start with Michael Patryn, or as he was later identified, Omar Dhanani. Dhanani, had been a convicted felon in the US on charges of identity theft, burglary and grand theft auto. Based on his charges, he had been deported to Canada, where he met Cotten.Dhanani had legally changed his name from Omar Dhanani to Omar Patryn and then to Michael Patryn in British Columbia.
The other founder, with an even more interesting story arc is Gerald Cotten. On paper, Gerald Cotten, died on the 9th of December 2018, in India, in the company of his newly wed bride, Jennifer Robertson. A hospital in Jaipur, declared him dead, after being diagnosed with septic shock, perforation and peritonitis. A statement of death was issued by Nova Scotia, on 12 December 2018. The same document stated that Quadriga had 363,000 registered users on its platform and they were owed a sum of $250 million CAD. Another interesting fact is that 12 days before his death, Cotten updated his will, with Robertson as the sole beneficiary. There have been conspiracies that he might’ve faked his death. This is because after an investigation by the Ontario Securities Commission and the FBI, it was found that Gotten had been operating the whole business without any regulation by any regulator in North America. And because of the lack of supervision, as the sole director of the company by 2017, Cotten had started indulging in illegal activities. According to a report by the OSC, he fell short of assets when withdrawals increased after a shake up in the Bitcoin prices. He created fake accounts and credited himself with fictitious currency and traded it with unsuspecting traders on its exchange. When he fell short of assets, he would attract new traders and use their deposits to satiate the withdrawals that were happening. He also lost an additional 28 million CAD while trading in crypto with unknown external platforms.
While having a visible and vocal leader helps a company in building trust, traders should always try to find out how a company offers you returns that could seem too good to be true. And the fact that a broker or platform is not regulated and is operating without any supervision, should always be a red flag.