A regulator's review found the cold-storage claims were false

Inherited archive entry · retained from the earlier edition. Its factual, legal and policy claims have not all been reverified for 19 September 2026. Research scope.

What the OSC's review found

QuadrigaCX ceased operations on 5 February 2019, days after the company disclosed that its founder and sole director, Gerald Cotten, had died in India the previous December. Over 76,000 clients were owed a combined $215 million in assets, according to the OSC staff report, dated 14 April 2020, and the bankruptcy trustee recovered or identified only $46 million of it. The review states plainly that this was not, as widely assumed, a case of assets lost with a dead man's private keys: staff conclude the shortfall arose mainly from Cotten's own conduct, trading against clients through alias accounts credited with what the report calls 'fake' currency and crypto balances, and covering his resulting losses with other clients' deposits.

What a platform statement is not

Quadriga's website told clients it used 'Cold Storage for the majority of the Bitcoins within our system', and Cotten told a client directly, by email in 2018, that funds were held in 'secure and offline multi-signature wallets'. The OSC's report page summarises the review's conclusion that these statements were false: most crypto assets sat in a mix of hot wallets and other exchanges' platforms, exposed to the same operational risks as any actively traded account, not the offline storage clients were told about. A public claim about custody practice, made without any way for a client to check it, is only as reliable as the platform's own honesty.

What only reserves, not statements, can show

Nothing about Quadriga's marketing let a client verify the claim independently; there was no published address, no attestation, no proof of reserve a customer could check against the chain. The report's own account of the shortfall, roughly $115 million in trading losses on the platform, $28 million lost on external platforms, and further amounts diverted to personal spending, is visible only because investigators later compelled records and reconstructed the transaction history from scratch. A statement of policy carries no more weight than the willingness of the people making it to be checked.

Questions to carry forward

• Does a platform publish anything a customer or auditor could independently verify against the blockchain?
• Who controls the keys to stated cold storage, and can that control be demonstrated rather than asserted?
• What internal oversight exists over a founder who is also the sole director and signer?

The OSC's review is not a criminal conviction of anyone; Cotten is dead and no charge was ever tested in court. What it establishes, from its own analysis of platform and blockchain data, is that a claim about where customer coins were held did not match where they actually were.