Coinspeaker
QuadrigaCX Co-Founder Grilled by British Columbia Authorities, Here’s Why
The British Columbia (BC) government recently filed an unexplained court order, seeking to seize assets belonging to Michael Patryn, co-founder of the defunct crypto exchange QuadrigaCX.
Authorities Move to Seize QuadrigaCX Co-Founder’s Assets
The director of Civil Forfeiture in B.C. explained in a report that the seizure targets a quarter-million dollars in cash, 45 gold bars, luxury watches, and jewelry contained in a safety deposit box belonging to the co-founder.
Records submitted to the British Columbia Supreme Court indicate that Michael Patryn, who was once involved with Gerald Cotten in establishing QuadrigaCX, is suspected of having obtained the assets illegally.
B.C. Solicitor General, Mike Farnworth highlighted that the recent move by B.C. authorities is the third instance that an unexplained wealth order has been issued in British Columbia since amendments were made to the Civil Forfeiture Act. Simply explained, unexplained wealth orders require individuals to explain the origins of their wealth and assets, especially where criminal conduct is suspected.
“Through this action, we are demonstrating again that criminals will have to prove that their assets are the proceeds of lawful activity and not financial crime,” Farnworth explained.
After Cotten’s unexplained death in India in 2018, the exchange, which had millions of investor funds under management, experienced turmoil. His passing accelerated the discovery of almost $215 million in missing investor funds, causing QuadrigaCX to file for bankruptcy under a court order in 2019. A subsequent investigation conducted by the Ontario Securities Commission later ruled that QuadrigaCX was not merely a failed business venture but a fraud and Ponzi scheme.
In June 2021, authorities seized a safety deposit box linked to Michael Patryn at a Vancouver-based CIBC branch. Among the items seized were $250,200 in Canadian currency, luxury timepieces, 45 gold bars from Australia and Canada, a variety of jewelry, and numerous identity documents linked to different aliases.
It is estimated that QuadrigaCX defrauded approximately 76,000 customers. The exchange’s bankruptcy trustee, Ernst & Young (EY), was only able to collect $46 million of the $215 million owed to investors. Last year, a law firm representing users of the defunct crypto exchange said it would begin an interim distribution of cash related to the trading platform’s bankruptcy proceedings.
Implications of Civil Forfeiture to QuadrigaCX
Civil forfeiture, a legal procedure in place in British Columbia since 2006, allows the province to recover assets without filing criminal charges. This option allows police to dismantle criminal enterprises and recover proceeds from illicit activity.
In the instance of QuadrigaCX, where thousands of investors were left in financial ruin, seeking justice through civil forfeiture is viewed as a critical step in dealing with the consequences of the fraudulent operation. The QuadrigaCX case serves as a reminder of the dangers of unlicensed cryptocurrency exchanges and the necessity of strict regulation in the nascent field of digital assets.
QuadrigaCX Co-Founder Grilled by British Columbia Authorities, Here’s Why
