Ernst & Young (EY), the court-appointed monitor overseeing the creditor protection proceeding involving the embattled crypto exchange QuadrigaCX, has released its “Third Report of the Monitor” on March 1.
According to EY’s latest report, QuadrigaCX used six separate crypto wallets for storing Bitcoin funds, all of which have been apparently stagnant since April 2018 except for one which was inadvertently used to transfer roughly $500,000 to the exchange’s cold storage which, as it stands, still remains inaccessible.
As EY noted:
“To date, the Applicants have been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Cold Wallets for deposits in April 2018, however, the Monitor and Management will continue to review the Quadriga database to obtain further information.”
Earlier in February, QuadrigaCX filed for creditor protection following its CEO’s sudden demise, resulting in the loss of the private keys used to access the exchange’s cold storage which held millions of user funds. The imbroglio has since led to a series of investigations to find the missing funds.
As further indicated in the report, upon investigation, EY has identified 14 user accounts that “may have been created outside the normal process by Quadriga,” suggesting that the accounts were likely “created under various aliases.”
According to EY:
“…the Identified Accounts were internally created without a corresponding customer and used to trade on the Quadriga platform. [EY] was further advised that deposits into certain of the Identified Accounts may have been artificially created and subsequently used for trading on the Quadriga platform.”
While EY is currently working on securing data involving transactions and account balances that have been transferred from the platform stored on Amazon Web Services’ cloud, the monitor noted that:
“Due to the account being a personal account in the name of Mr. Cotten, AWS has indicated that it is unable to provide the Monitor with access to the AWS Account to permit a copy of the data that it is hosting to be secured.”
In an effort to trace where the funds went, the CEO of crypto exchange Kraken has offered a $100,000 reward for those who could provide any information that may potentially lead to the retrieval of the missing funds.
As Kraken stated in its announcement earlier this week:
“All leads collected by Kraken will be provided to the FBI [Federal Bureau of Investigaion], RCMP [Royal Canadian Mounted Police] or other law enforcement authorities, who have an active interest in this case.”