During the QuadrigaCX cryptocurrency meltdown, many people lost their funds including Tong Zou, a software engineer, who lost his life savings in the range of more than $500,000.
The 30-year-old Vancouver resident was not scalping the markets with high-stakes trades when the platform crumbled on January 28. QuadrigaCX was shut amid heightened controversy and conspiracy rumors.
Zou was searching for a direct and easy way to transfer US funds into Canada for a down payment to acquire a local property. He confirmed that he was devastated to lose his life savings but remains positive on the future of the cryptocurrency markets. However, the collapse is a bad mark for the entire Canadian cryptocurrency space.
The collapse reveals an unregulated industry that is continuously attracting individuals who are suspicious of traditional banking systems. The people prefer anonymous and decentralized nature of the cryptocurrency world making them vulnerable to hackers and scammers. Also, the collapse revealed that some investors were destroyed while investing normally.
When the crypto markets were thriving in 2017, most users like Zou made some phenomenal profits. However, most of the gains were lost in 2018 during the persistent bearish trends in the market. Zou said that he chose to move his money across the border through the now collapsed Vancouver-based QuadrigaCX in September 2018 since it offered a 10% premium.
The exchange was relatively known in the crypto world since it was among the first to start operations in Canada. It appeared to be a safe bet since its launch in 2013 by Canadian Gerald Cotten. However, it started to experience delays during fund withdrawals by last fall and many users were disgruntled.
Zou noticed the lag in fund withdrawals but was not alarmed. On December 9, Cotten, the company’s 30-year-old CEO and sole director, died from Crohn’s disease complications while traveling in Jaipur, India. When his death was confirmed over a month later, it was revealed that he was the only one who knew all the encrypted pass codes necessary for accessing cold wallets holding $190 million in BTC and other cryptos.
The company also acknowledged that around 115,000 users were owed another $70 million, an amount tied up in bank drafts that are held by several third-party payment processes. Other amounts are said to be lost which most of the previous customers do not believe.
On February 5, the Nova Scotia Supreme Court granted QuadrigaCX some temporary protection from most of its creditors. Also, the court appointed a monitor to help in the search for the missing money and selling the company is also not ruled out. Last week, a cryptocurrency expert from Kelowna, B.C., Giuseppe Burtini, filed an affidavit with the court claiming that his ‘unnamed’ company client is owed a “multimillion-dollar” balance by QuadrigaCX.
CIBC froze the accounts for Costodian, preventing QuadrigaCX from accessing over $25 million in January 2018 according to court documents and the matter is yet to be resolved. Burtini’s affidavit says he wants to join the court-appointed users’ steering committee since he has the skills and tools to help find the missing funds.
A Calgary-based QuadrigaCX user, Ryan Kneer, alleged that he had used the platform daily for the past two years before its collapse. He also did not reveal the exact amount owed stating that privacy is essential in the cryptocurrency world and it is also meant for security purposes.
As for Zou, he said that he plans to first find measures to help recover from the losses although he knows it could take long.