gerald cotten was too good to be true. he had thick strands of strawberry blonde hair, youthful enthusiasm, and the kind of cheerful disposition that made people want to be around him.
When the 30-year-old died, unexpectedly and mysteriously, in 2018, some $250 million in Canadian cash and cryptocurrency also went missing. Around 75,000 customers of cotten’s quadrigacx cryptocurrency exchange suddenly lost fortunes they had earmarked for everything from tuition to retirement funds to life savings to mortgages.
Reading: 250 million bitcoin gone
cotten is now accused of perpetrating a state-of-the-art ponzi scheme fueled by 21st-century technology and cunning. and some investors suspect that he may have faked his own death.
The story, as recounted in a new documentary, “Dead Man’s Switch: A Cryptographic Mystery,” streaming on Discovery+ Thursday, began in 2014 when Quadriga was released by cotten and michael patryn.
“It was one of the only games in town [for cryptocurrency enthusiasts],” Sheona McDonald, who led the paper, told the post. She “she wired them $1,000 and was able to see the crypto in her account. I think there were a couple of years where it worked legitimately…I don’t think Gerry could have envisioned a future with money pouring in the way he ultimately did.”
Little did they know, however, that the two partners had already engaged in identity fraud, money laundering, pyramid schemes, and other questionable get-rich-quick tactics.
cotten grew up in belleville, ontario, nicknamed the friendly town. his parents ran an antique shop and he graduated from york university in toronto with a bachelor’s degree in business economics.
In the early 2000s, he met Patryn, who was six years older and has a mysterious past. According to Vanity Fair, Patryn was arrested in Southern California, where he lived with his family, and pleaded guilty to conspiring to transfer stolen identity documents. He was sentenced to 18 months in federal prison before being deported to Canada in 2007.
by then, he and cotten had already communicated on a message board called talkgold. he focused on high-yield investments, which promised incredibly fast and high returns. the site is said to have attracted a strange mix of people ranging from gullible fools to cunning swindlers hoping to catch them.
At age 15, cotten launched his first pyramid scheme. According to Vanity Fair, it was called S&S Investing and promised returns of up to 150 percent in just 48 hours. the sham ran for three months before it closed and investors’ money disappeared.
When cotten and patryn launched their company, quadriga, touting it as a cheap and easy way for people to buy, sell, and trade cryptocurrencies at a time when it was testing for the uninitiated, back in 2014, they were already well versed. in the dark arts.
vancouver, according to david gerard, author of “50ft Blockchain Attack: bitcoin, blockchain, ethereum & smart contracts”, was the perfect place. “canada is known for having a lot of nice and trustworthy people, and a bunch of others who exploit them,” gerard said in the post. “gerry the leader of the operation was a very charming guy and bitcoin fans are gullible talk to them about the future of money add some buzzwords and they believe any rubbish.”
Patryn would soon split after an alleged spat about whether or not to go public. Patryn has disputed reports of a criminal past and told Bloomberg that he left the company in 2016 and, since then, “has not been involved in the operations or management of any of the Quadriga companies.”
It didn’t hurt that the chariot entered the cryptocurrency game at an opportune time. It was launched when bitcoin sold for less than $300 per coin. During 2017, when the exchange was up and running, the value of the coin jumped to $13,000. investors couldn’t get their money fast enough.
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by then, quadriga ruled as the largest cryptocurrency exchange in canada, with over a billion dollars in transactions in 2017.
and cotton made it easy. Instead of letting customers maintain their own digital wallets with 64-character codes, known as private keys, which were impossible to remember and disastrous if lost, Quadriga often held the cryptocurrency for them.
which would then be a problem. as mcdonald said, “if you don’t own your crypto key, you don’t own your crypto.”
added that collection was often problematic for customers. “There were legitimate banking problems. banks did not want to deal with crypto companies. [employees at] quadriga would bring him cash when they could” and, depending on how hard he pushed for payment, that could take weeks. “They would bring it to you in shoe boxes or big envelopes,” McDonald said. “or they would send checks through third-party payment processors.”
But all of that happened during the good times, when crypto was enjoying its upward surge. One year later, in 2018, the party had (temporarily) fizzled out. By December 2018, Bitcoin had dropped to $3,700 — still not bad if you bought it early, but terrible for the great majority who got in during the meteoric ascent.
“people wanted to withdraw and couldn’t,” gerard said, explaining that the shortfall was exacerbated by a computer mishap that resulted in $14 million worth of ethereum disappearing from quadriga, and by the canadian imperial bank of commerce freezing $21 million of quadriga funds due to perceived financial irregularities.
“gerry was smiling and telling people not to worry, promising they would get paid,” gerard said. “but quadriga was running out of money.”
As the cryptocurrency market tanked, customers saw their life savings evaporate month after month.
however, one person seemed perfectly up to the task: the talented mr. cotton.
“He spent money like it was water,” said Gerard. “He and his wife [Jennifer]traveled the world. Gerry did everything [for the company] from his laptop.”
the couple traveled, often on private planes, to places like paris, hawaii and morocco. there was the purchase of a $600,000 yacht, 17 houses in canada (some of which were rented), a cessna 400 plane that cotten never flew, and a top-of-the-line lexus.
“He would tell you he ran a fabulous bitcoin exchange,” gerard said. “He would say that he has money because he is a fabulous businessman.”
but in reality, gerard argued, cotten was just an old-fashioned embezzler with a modern angle: “he mixed client funds with company funds. he dipped into customers’ money [to boost his lifestyle].”
in december 2018, cotten and jennifer traveled to india for what was said to be a honeymoon. While there, they planned to found an orphanage to be named in Cotten’s honor. Before she left, according to Vanity Fair, she bragged that money went better in India than in Canada.
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According to the documentary, Cotten had long suffered from Crohn’s disease but kept quiet about it. On Dec. 8, nine days after landing in India and having checked into the luxurious Oberoi Rajvilas Hotel in Jaipur, he was hit with severe stomach pain. Doctors at a nearby hospital initially wrote off the malady as traveler’s diarrhea. But blood work showed Cotten had developed septic shock. Within 24 hours, he suffered three heart attacks. The last one killed him.
on january 1st on january 14th, 2019, more than a month after cotten passed away, the quadriga community was notified of his death. they responded with dismay and mourning — one described him as “a kind man with good taste” — even as they struggled to withdraw money from his company.
On January 1, 31, as quadriga filed for creditor protection, sadness turned to anger. A source in the film, identified only as “ryan, a quadriga creditor,” describes the general sentiment as “panic, worry, just a cocktail of negative emotions.”
“as soon as i saw that notice [on the quadriga website], i knew the money was gone,” said mcdonald, who was not only making a film about crypto, but also modestly invested in it through of quadriga. “They were suspending payments.”
This was for good reason. According to a court filing, c$180 million was missing, c$250 million was owed to customers and the passcodes for company accounts were known only by Cotten. There was no “dead man’s switch,” which would have sent the codes to a predetermined source in the event that accounts went unopened for a period of days.
Among the hardest hit was Tong Zou, who works in tech and put money into Quadriga. “I ended up losing my life savings, I lost $400,000,” he said in the documentary. “I took three loans from the bank and put it all in crypto. I got into a deep hole and the only way out was to sell my house.”
three years after cotten’s murky death, most of the lost money has yet to materialize; most of what was found can be linked to funds frozen by the Canadian bank. Some believe that he unsuccessfully gambled with his clients’ money, swapping it into different currencies and trying to arbitrage, buying and selling securities or currencies simultaneously to capitalize on price differences.
“who knows?” McDonald said. “he could have moved to other exchanges or sent to other people or turned into cash.”
Some have even questioned whether or not Cotten really died. In fact, jilted investors have requested to have the body exhumed.
One source in the document even goes so far as to mention a substance known as “Haitian zombie powder” that can allegedly be used to fake death: “You appear dead for a few days, until you get the cure.”
zou is “80 percent sure [the cotton] is dead.”
McDonald agreed: “If he had been cremated in India, I’d be more suspicious.”
according to the film, cotten was embalmed in the anatomy department of a medical college in jaipur, no autopsy was performed, and the body was shipped back to canada. he was buried five days after he died. the closed casket funeral took place in halifax, nova scotia.
gerard has a more fanciful vision. “Actually, it’s plausible that he’s not dead, although I have no idea how likely that is,” he said in the post. “I like the idea that there is an island out there somewhere where gerry cotten is having a cocktail.”
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