Analysts from the CryptoMedication team shared their own research results in which they state that QuadrigaCX, which owed its customers tens of millions of dollars in cryptocurrency, could not have the stated amount. In connection with the recent events, the circumstances of the death of its owner, who allegedly took access to cold wallets with him to the grave, become even more mysterious, and QuadrigaCX itself can be one of the first confirmed examples of the cryptocurrency exchange, which practiced the partial reserve.
During the preparation of the work, the authors contacted QuadrigaCX clients and collected data on the transactions they carried out. This made it possible to identify a cluster of addresses that were under the control of the exchange and were actively used by it for arranging transfers between customers. At the same time, none of the transactions submitted by users leads to a wallet that could be called reserve or cold. Also, analysts were unable to find evidence that the exchange wallets had ever had a significant amount in bitcoins (more than 100 BTC).
The key takeaway from the deposit information provided by customers is that QuadrigaCX more than likely never held enough $BTC to account for the customer funds. In the next section, the customer withdrawal information related to $BTC transactions on the exchange reflect that QuadrigaCX was clearly re-routing payments from customers to satisfy withdrawal requests from other customers on their exchange, effectively operating a shell exchange or a ponzi.
Analysts consider one example in which the request for withdrawing customer funds was satisfied only after the exchange received the required amount from other users.
More specifically, it appears that the exchange had attempted to create individual cluster wallets for customers at one point in time, yet found itself in a situation (more toward the end of 2018), where customer funds that had originally been apportioned for others were eventually redirected to compensate new customers requesting their withdrawals.
CryptoMedication do not guarantee the actual conformity of their assumptions to reality, but note that in comparison with the practices used by other solvent exchanges (Coinbase, Bittrex, Bitstamp, Binance, etc.), transfer Bitcoins from one client to another in order to meet The latter’s inquiries seem "extremely wrongful and ineffective."
No less doubtful are the statements related to the impossibility of withdrawing funds from the exchange’s wallets, access to which allegedly only had the owner of the company, Gerald Cotten, who died in December. Analysts have found transfers from the purses of the exchange totaling 3.53 BTC, made on January 24-25.
They also mention Cotten’s conversation with CoinDesk in February 2015. "Gerry Cotten, the exchange’s former CEO and Owner that allegedly passed away in India nearly two months ago, stated in an interview with the publication that the exchange engaged in “extensive security measures”.," - says the publication. Currently, the QuadrigaCX management is trying to insist that it cannot pay customers, since it does not have access to cold wallets, however, the alleged presence of a multi-signature once again does not favor their version.
In the coming days, the authors of the report promise to provide additional information regarding the situation with QuadrigaCX, explaining the "slight haste" of its release by the need to publicize the available information before the exchange applies for protection from creditors 5 February.