Bitcoin addresses linked to former Canadian crypto exchange QuadrigaCX Wake Up

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More than 100 bitcoins tied to former Canadian crypto exchange QuadrigaCX were moved out of cold wallets believed to be out of anyone’s control over the weekend, after lying dormant for more than three years. The company’s trustee in bankruptcy, Ernst and Young, did not initiate the transfers, CoinDesk has learned.

QuadrigaCX went bankrupt in 2019 after the apparent death of founder and CEO Gerald Cotten. At the time of its collapse, Quadriga reportedly owed thousands of customers nearly $200 million in various cryptocurrencies, a staggering failure for what was once Canada’s largest crypto exchange.

EY, which acts as a domain trustee of Quadrigas, announced in February 2019 that it had lost control of approximately 100 BTC after mistakenly sending the coins to cold wallets operated by Quadriga to which the financial services company Big Four said they couldn’t access. At the time, bitcoin was worth around $355,000 (C$470,000).

Bitcoin from these addresses remained frozen until last Friday, when coins from all five addresses left between 6:52 p.m. ET and 7:14 p.m. ET.

Magdalena Gronowska, bankruptcy inspector and member of Quadriga’s creditors’ committee, said the funds were not transferred by EY.

A total of 104.34 BTC worth approximately $1.7 million (CAD $2.4 million) at press time left Quadrigas’ wallets. Many of these funds seem to have been distributed to different wallets.

The amounts sent from each wallet correspond to the amounts sent to these wallets in 2019. The wallets in question are:

Blockchain sleuth zachxbt said on Twitter that the majority of those funds, nearly 70 BTC, appear to have gone to Wasabi, a coin mixing service. It is unclear why EY, a well-established financial services institution, might want to use a crypto mixing service, the main purpose of which would be to hide the source and destination of funds.

The story continues

“Bankruptcy inspectors are aware that Quadriga funds have been transferred. Thanks to blockchain investigators for following the feeds, we are working to gather more information and hopefully we can recover the stolen funds,” Gronowska said.

A spokesperson for EY and an attorney for Miller Thomson, which represents Quadriga’s creditors, did not return requests for comment.

In initial reports, EY said Cotten, as the sole owner of Quadriga in its final days, was the only person who could access its funds. Investigators said Cotten failed to keep clear records, which is part of why the effort to recover client funds is dragging into a fourth year.

The Canada Revenue Agency, the nations tax enforcement body, is also investigating the exchange and whether or not it filed its taxes properly while it was still operating. A person familiar with the matter said the CRA’s investigation was the main obstacle to continuing with the bankruptcy proceedings.

UPDATE (December 19, 2022, 22:20 UTC): Adds additional details.

UPDATE (December 19, 20:50 UTC): Adds additional details and confirms that EY has not removed the funds from the wallets.

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