EY did not initiate transfers of $1.7 million in Bitcoin linked to defunct QuadrigaCX

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Accounting firm Ernst & Young has denied transferring funds mistakenly transferred three years ago to inaccessible cold wallets associated with QuadrigaCX, the infamous Canadian crypto exchange that lost $190 million in user funds before death of its CEO under mysterious circumstances.

On December 19, researcher ZachXBT reported the movement of 104 Bitcoins ($1.7 million) spread across five cold wallets, a large portion of which was on the Wasabi privacy wallet.

This bitcoin had been dormant for over three years since employees of the collapsed exchange inadvertently sent the bitcoin to these wallets under the auspices of EY.

Five wallets attributed to QuadrigaCX unexpectedly moved ~104 BTC on Dec. 17 for the first time in years.

1ECUQLuioJbFZAQchcZq9pggd4EwcpuANe1J9Fqc3TicNoy1Y7tgmhQznWrP5AVLXj9R1MhgmGaHwLAvvKVyFvy6zy9pRQFXaxwE9M1HyYMMCdCcHnfjwMW2jE4cv9qVkVDFUzVa2JPtxDHeKZkBLhQDAheZkZfLhQDAheZkZfLJPtxDHoekZf

ZachXBT (@zachxbt) December 19, 2022

The accounting firm is the court-appointed monitor and trustee in bankruptcy that oversees the settlement of the now-defunct crypto exchange and is also responsible for recovering stranded funds.

It was previously unclear if the wallets were still active, and it remains unclear who might have moved Bitcoin recently. Ernst & Young denied any involvement in the movement of the funds.

In a statement Tuesday, the accounting firm said that while it worked with management and others to recover the Bitcoin transferred to these wallets, the private keys associated with the cold wallets have not been located despite review. detailed.

Locked Bitcoin remained in Quadriga’s cold wallets until December 16, 2022, before unauthorized transfers were initiated, he added. The trustee confirms that he did not initiate the transfers.

Contacted for comment, EY has yet to share information on who may have moved Bitcoin on Monday and how they were mistakenly sent to cold wallets in 2019. Decrypt will be updated with any response.

What is QuadrigaCX?

QuadrigaCX abruptly shut down in February 2019, leaving millions of client funds tied up in seemingly inaccessible offline cold wallets. The exchanges’ late CEO Gerald Cotten was solely responsible for transferring funds offline, a security procedure known as cold storage, but cold wallet addresses were apparently only known to him.

The accounting firm Ernst & Young was then appointed to try to recover the losses on behalf of the clients. He announced weeks later the exchanges of erroneously transferring 103 Bitcoins, then worth around $500,000, to five different QuadrigaCX cold wallets that he claimed he could not access.

Amateur investigators were able to find five wallets that had received roughly the same 104,335 Bitcoin, the same amount moved on Tuesday through several small transactions.

An alleged Cotten accomplice, Michael Patryn, who reappeared in February 2022 under the pseudonym 0xSifu as part of the DeFi Wonderland project, said in response to ZachXBT’s findings this week that the funds were transferred by a QuadrigaCX employee, Alex , acting on instructions. from EY.

They claimed that they accidentally lost the funds by sending them to outdated wallets. Now it’s moving again, Patryn said. Wen competence.

So… Alex, the developer of Quadriga, was tasked with sending these parts when the company was under the control of Ernst & Young three years ago. They claimed that they accidentally lost the funds by sending them to outdated wallets. Now it’s moving again. Wen competence. pic.twitter.com/CR9OB07Bcc

0xsifu (@0xSifu) December 20, 2022

Cotten’s abrupt trading shutdown and death in India in 2019 has been the subject of multiple investigations and feverish speculation. Official investigations and a number of journalists eventually revealed that the missing funds were largely not locked in cold wallets, but had been siphoned off by Cotten, who operated the exchange as a Ponzi scheme and a personal piggy bank. .

The exchange was stuck in Canadian bankruptcy court for several years.

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