Where did the Funds go?
When Quadriga filed for creditor protection on February 5, 2019, it owed its clients assets worth collectively $215 million. The Monitor only recovered or identified $46 million of assets, leaving a $169 million shortfall.
All figures approximate and/or estimates.
to Affected Clients at Bankruptcy - $215 Million
Due to the absence of accounting ledgers and records, and limited records available from third-party sources, we were unable to identify all expenses or losses incurred by Quadriga. However, additional expenses or losses that are likely significant include the following:
1 – Trading losses sustained on external platforms
Cotten may have incurred trading losses in addition to the losses identified in note 3 when trading on external platforms; we are aware that Cotten likely transacted on at least two other external platforms; however, the information to quantify any additional losses is either incomplete or was not provided to us.
2 – Other fees paid to external platforms
Cotten likely traded on other external platforms, and he may have incurred fees not included in note 5.
3 – Other fees paid to third party payment processors
Given the limited available records, we were only able to quantify fees relating to two third party payment processors; however, we are aware that hundreds of millions of dollars moved through other payment processors. This likely would have caused Quadriga to incur additional fees, possibly in the range of millions of dollars (assuming a conservative fee rate of 1%).
4 – Other operating expenses not considered in note 5
As of 2016, Quadriga was not properly recording expenses. Given the nature of the business, it is likely that other operating expenses were incurred that we could not identify.
5 – Additional client assets transferred by Cotten for personal use
As discussed in note 4, Cotten may have misappropriated additional client assets; however, we could not determine whether or not this occurred.