QuadrigaCX - Bitcoins: The internet's biggest crypto thriller gets an unexpected sequel

Some stories keep me busy for years, no matter how often I think: That's really it.

And in this case I'm not even talking about zombies related to network policy, such as data retention, which will probably only die when there are no longer any interior ministries.

But cases like QuadrigaCX.

Most recently, in July 2020, I wrote a detailed report about the Canadian crypto trading exchange and its founder and million-dollar scammer Gerry Cotten, who died suddenly in 2018.

As a reminder, Cotten died at the age of 30 on a trip to India where he was said to be planning to open an orphanage.

It was initially said that he took the private keys to his customers' crypto deposits with him to his grave.

Converted into euros, it should have been a nine-digit sum, all gone, forever.

Because there were so many cinematic inconsistencies that there is now even a Netflix documentary about the case, some suspected that Cotten had faked his death in order to make off with the fortune.

Even the demand of the creditors for his exhumation was discussed.

I contacted three parties involved at the time to find out if Cotten's grave was actually opened.

Nobody wanted to confirm it.

But then it turned out that the so-called cold wallets, for which only Cotten was supposed to have the private keys, were all almost empty.

And that was nine months before Cotten's death.

He had simply gambled away the deposits of QuadrigaCX customers.

Gradually, Ernst & Young's auditors and investigators revealed how Cotten had set up a Ponzi scheme that was on the verge of final collapse at the time of his death.

After all, Ernst & Young was able to raise 46 million of the total of 215 million Canadian dollars that QuadrigaCX owed to others.

The rest seemed lost.

That was the end of the story, or so I thought. Until now.

Because a kind of sideline of the story has suddenly picked up speed again.

In February 2019, shortly after the start of the investigation and three weeks after the announcement of Gerry Cotten's death, Ernst & Young announced that a mishap had occurred.

What was left of QuadrigaCX's management at the time accidentally transferred 103 Bitcoins to the almost empty cold wallets on February 6, to which only Cotten would have had access.

At the time, the incident was little more than a drop in the bucket of creditors, because the 103 bitcoins were only worth around 468,000 Canadian dollars.

But they were considered inaccessible.

The auditors did not write how the mistake happened and who was responsible for it in detail.

In any case, the bitcoins have been in the cold wallets since then, so the assumption was that nobody had the private keys for them.

But last Friday, 104.34 bitcoins were suddenly transferred from those same wallets to several other wallets.

Nobody knows by whom and to whom.

Obvious attempt at obfuscation

It looks like it should stay that way from the point of view of the polluter or polluters.

Because 69 bitcoins were immediately sent to a so-called mixer.

These are services that split and mix cryptocurrency transactions so that each user ends up with roughly the same amount, but no longer the same bitcoins.

In other words, blenders are for obfuscation.

Ernst & Young did not execute or authorize the transactions, CoinDesk was the first to report.

Why would such a company use a mixer?

But then who was it?

Who still has access to Gerry Cotten's cold wallets and for how long?

And who is apparently trying to grab the equivalent of a good 1.6 million euros?

Blockchain analysis may eventually help solve the mystery, Mixer or not.

The detectives in such mysteries keep track of bitcoin migrations from one wallet to the next, and their methods just keep getting better.

I'm sure we'll be reading a lot of it in 2023.

By the way, if you are still looking for a last-minute Christmas present for nerds: The great US journalist Andy Greenberg has just published a book on this topic, it's called "Tracers in the Dark".

Our current Netzwelt reading tips for SPIEGEL.de

• »How to get started with Mastodon« (six minutes of reading)

  
  

  The decentralized Twitter alternative Mastodon is showing strong growth.

  Finding your way there is not easy, however.

  Torsten Kleinz has five helpful tips for newcomers.

• »You like to read digitally?

  You should know this cheap flat rate« (nine minutes of reading)

  
  

  Libraries also provide many digital media at practically unbeatable prices.

  Jörg Breithut explains the so-called Onleihe and what snags it has.

• "That's behind the dating app Hinge" (six minutes of reading)

  
  

  This dating app Hinge is there to make itself superfluous again quickly - claims the provider.

  But how different is it really from Tinder and Co.?

  A practical test by Matthias Kreienbrink.

External links: Three tips from other media

• »The Safe Zone« (Video, English, 6:38 minutes)

  
  

  The first short film for which – according to the creators – an artificial intelligence (AI) not only wrote the screenplay but also all the directing instructions.

  Here is a kind of "making of" in the form of a Twitter thread.

• »Burning Man was better in 1963« (Facebook posting, three-minute video and some pictures)

  
  

  The festival has only existed since the mid-1980s.

  But the AI ​​Midjourney shows how it would have looked a good 20 years earlier.

  The material is truly amazing - and extremely amusing.

• A Totally Normal Interview With Author Emily St. John Mandel (English, two-minute read)

  
  

  Writer Emily St. John Mandel is best known for books such as Station Eleven and The Glass Hotel (great book by the way!).

  This interview serves one purpose only: as a source for Wikipedia.

I wish you a peaceful and contemplative week,

Patrick Beuth