The head of the largest American cryptocurrency company Coinbase, Brian Armstrong has announced the results of an independent investigation into the canadian bitcoin exchange QuadrigaCX, which presumably no longer have access to the cryptocurrency to users ‘ funds of $137 million
Wanted to share a summary of what we believe happened to QuadrigaCX. We did our own internal research, including some blockchain analytics, to see if we could help. Important to note that this is just our best guess. Take it as *pure speculation*, nothing more.
— Brian Armstrong (@brian_armstrong) 21 Feb 2019
“We conducted our own study, including analysis of transactions associated with the exchange. It’s just our guesses, do not take them as ultimate truth”, said Armstrong, but added that the version of analysts Coinbase seems plausible.
So, the company was able to detect clusters that are more likely are a cold storage QuadrigaCX. The funds, according to analysts, was transferred to manual mode, and the output of balances was completed in early 2018.
1. We identified clusters that look like QCX”s “cold storage”, were controlled by a human (manually), and balances were moved out by early 2018;
— Brian Armstrong (@brian_armstrong) 21 Feb 2019
However, Armstrong believes the probability of an exit Scam is quite low, because QuadrigaCX, one of the world’s oldest stock exchanges.
2. QCX was one of the oldest exchanges in existence (founded in 2013). If they planned an exit scam, it likely would have been timed better;
— Brian Armstrong (@brian_armstrong) 21 Feb 2019
“If they were planning an exit Scam, I would have chosen a better moment”.
He inclines to the version that is associated with the events of almost two years ago. In June 2017 the bug in the smart contract QuadrigaCX turned to exchange multi-million dollar losses. Then began the translation of the user balances in cold storage.
3. They suffered a multimillion dollar bug in June 2017 (before things went vertical). https://t.co/SxBLcJgaiP This is when we start to see movement of funds to “cold storages”;
— Brian Armstrong (@brian_armstrong) 21 Feb 2019
Probably as a result of unexpected losses from the exchange began to have serious financial difficulties and liquidity problems. Scheme to withdraw funds from cold storage indicates that QuadrigaCX possibly traded funds users in order to patch the “hole”. Parallel to the deteriorated situation on the market, which also could be hit hard by the stock exchange.
5. Liquidity dried out and bear market of 2018 may have caught up with them;
— Brian Armstrong (@brian_armstrong) 21 Feb 2019
Armstrong suggested that at some point the role played by the negligence of the employees, which then tried to hide.
6. The Sequence of events suggests this was a mismanagement with later attempt to cover for it.
— Brian Armstrong (@brian_armstrong) 21 Feb 2019
“This implies that at least some people were aware that the exchange is not enough money. If so, the untimely death of the CEO was used as a pretext in order to give the company finally drown”.
The head of Coinbase said that QuadrigaCX users began to complain about the problems with the withdrawal of money long before the death of Gerald Cotto in Jaipur, 8 Dec. So, the user could decide to invent a story about private keys on the laptop of a CEO, to hide the insolvency of, one of the reasons could be poor management.
So maybe after about a month of debate [Dec — Jan], management decided to cut losses and release a statement claiming that access to money was lost with CEO’s death?
— Brian Armstrong (@brian_armstrong) 21 Feb 2019
Recall that the Elementus researchers argue that there are no cold storages for Ethereum at QuadrigaCX have never been, and the exchange was derived in the order of 268 thousand ETH on the exchange platform ShapeShift.
WSJ: exchanges QuadrigaCX could be withdrawn $24.7 million was traced to ShapeShift https://t.co/2loFOYk9yk#QuadrigaCX
— ForkLog (@ForkLog) 20 February 2019
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