QuadrigaCX CEO scamAfter the collapse of the QuadrigaCX cryptocurrency exchange, Ernst&Young (EY) had been researching the bankruptcy, only to find that the now deceased CEO had been using customer funds to margin trade cryptocurrencies.
After conducting research on Quadriga’s case, EY released a 70 page-long research paper detailing the reasons on how flawed the business model and activities were with the exchange.
According to the report, Quadriga had been making questionable transactions on other exchanges as well as unidentified wallets, alongside allowing its CEO to trade user funds with margin, albeit unsuccessfully.
EY also found out that, the exchange had been topping up user accounts with various amounts of cryptocurrencies when the user had not deposited anything beforehand. The exchange was hoping that these customers would make deposits sometime in the future.
Furthermore, the exchange was conducting multiple transfers to other companies with unidentified reasons. In total, EY found cases for nearly 10,000 BTC, almost 400,000 Ethereum and a little less than 250,000 LTC transfers to its contemporary exchanges.
Additional cases of almost 1500 BTC being transferred to unidentified wallets have also been sighted.
These transfers would then be reverted back to Quadriga, which turned out to be massively unprofitable for the exchange.
According to Ernst&Young, these discoveries are just the tip of the iceberg as the company continues to conduct research on unlawful business activities from the exchange.
The FBI is fast at work to identify and compensate the exchange’s customers that were defrauded of their funds.
