My Opinion On The QuadrigaCX Situation

Please understand that this is mostly speculation but I haven't seen this opinion here yet so I will voice it. This was removed from r/QuadrigaCX and r/BitcoinCA.

Facts:

1. Around June 2017, QCX lost over 67,300 ETH due to a programming error. It is unlikely that this will ever be recoverable. https://np.reddit.com/r/ethereum/comments/6ettq5/statement_on_quadrigacx_ether_contract_error/ https://etherscan.io/address/0x1e143b2588705dfea63a17f2032ca123df995ce0
2. In early 2018, CIBC froze $28M CAD and it has yet to be returned. https://www.newsbtc.com/2018/10/09/banks-hate-crypto-in-canada-quadrigacx-exchange-sees-28m-frozen/
3. Around the same time in early 2018, QCX realized that most funds held with scam payment processor WB21 were unrecoverable. I'm unsure of the amount but Gerald had confirmed it as substantial. I suspect it is in the $1-10M range, potentially more. https://www.google.com/search?q=wb21+scam
4. Near the end of 2018, Crypto Capital lost their banking partners while holding a substantial amount of funds for QCX. While these funds would not be considered unrecoverable at this time, they are still inaccessible. Holdings with Crypto Capital are estimated to be $10M+.

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Speculation:

A. Due to fact #1, QCX was forced to engage in fractional reserve accounting of customer funds and supply CAD for ETH which could not be withdrawn. At its peak, ETH was worth approximately $2000 CAD which would equate to a total value of $135M CAD; this is the upper bound for speculative losses by QCX in the event that they "bought" all outstanding ETH from clients by placing their own fake orders on the exchange. The real internal loss is likely much less but I would assume it is still well into the 8-figure range.

B. Just as (A) was happening, QCX dealt with the simultaneous realization that they were being fucked by both CIBC and WB21. This heavily affected their liquidity and caused payments to slow to a crawl.

C. Slow payments caused large clients to reduce holdings on the site or exit completely around mid 2018, reducing available liquidity and further slowing withdrawal times.

D. By late 2018, Crypto Capital was the straw that broke the camel's back. Another $10M+ held meant there was almost no money to pay clients.

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Here's where the real speculation comes in:

E. Gerald was trading internally with "QuadrigaCX Bucks" to allow clients to continue using the platform. He assumed cryptocurrency value would continue to climb and didn't mind "buying" a large portion of the lost ETH since he thought it might be recoverable (through an EIP).

F. When the cryptocurrency market crashed in early 2018, he realized that he was fucked. QCX is likely in debt somewhere in the 8-figure range due to material losses from errors and 3rd party scams/problems, as well as speculative losses from fake internal trading.

G. Gerald realized that his actions were criminal at this point. His position as the sole director of QCX meant he would face all repercussions for the shady activities of the company; potentially decades of jail time.

F. Gerald began to fabricate an exit plan. I won't speculate on the process but this likely culminated with his "death" in India in December. There's minimal doubt that he has private keys with him, but these will never be found; funds were likely withdrawn from the QCX hot wallet over time masquerading as client withdrawals and tumbled through standard mixers. The real scam, however, is the avoidance of both criminal prosecution and the enormous debt owed by QCX.

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Again, this is all speculation due to their unwillingness to communicate with their clients. This is what happens when you let imaginations run wild by remaining silent in questionable times.