QuadrigCX exit scam part 2 – Bitfinex and TETHER also represented by the same INSOLVENT institution CryptoCapitalCo that services QCX

The beauty of bitcoin and blockchain is that it is an open ledger. All the transactions are visible and traceable. And boy are their some sleuths doing some serious tracing just now. This is after the biggest Canadian cryptocurrency exchange QuadrigaCX went insolvent late last year. Then to add further suspicion the CEO mysteriously “died” in India of all places, adding huge suspicion to the mystery of the missing money. I wrote an article on it here: https://steemit.com/bitcoin/@julianhorack/ceo-of-canada-s-largest-crypto-exchange-mysteriously-dies-in-india-taking-keys-to-usd150-million-with-him  

It gets worse 

But now the plot thickens and the potential disaster runs way deeper than anyone would dare to imagine. I’m not one to spread FUD, since I love blockchain technology and see a bright future for it, as well as bitcoin. I’m just reporting the research I’ve uncovered regarding the potential bombshell that has landed unexploded – for now – on the crypto industry globally. We all need to be aware of the rumours, in case they become facts and involve many of us in the fallout. If you use Bitfinex or Tether then that means you. 

Follow up on the QuadrigaCX scandal 

It transpires that QuadrigaCX, was having serious liquidity trouble for some months already, with customers unable to withdraw their funds. Well this is nothing new for the Canadian exchange because even as far back as a year ago people were posting on Reddit that this exchange was run by known fraudster Patryn aka Omar Dhanani of “Midas Gold” and “Talkgold” ponzi schemes. It’s hard to tell which name is legit and which is an alias or if they are the same person or two people but apparently Omar Dhanani aka Michael Patryn was one of six men arrested for internet ID theft and credit card conspiracy fraud way back in 2005, long before bitcoin was even born. They were running shadowcrew.com, a mob of highly organized online criminals. Dhanani aka Patryn was again arrested in Montreal in 2013 in connection with a money laundering operation through Liberty Reserve. 

Meltdown in snowy Canada 

Well since the meltdown at QuadrigaCX people have been trying to trace their funds and track the movements of crypto from the exchange in the hope that they could find out more. Some brilliant sleuthing was done by one author, who published his findings in a Medium article a few days ago, link below. Allow me to quote his summary of what he discovered: 

1. It appears that there are no identifiable cold wallet reserves for QuadrigaCX. 
2. It appears that QuadrigaCX was using deposits from their customers to pay other customers once they requested their withdrawal. 
3. It does not appear that QuadrigaCX has lost access to their Bitcoin holdings. 
4. It appears the number of bitcoins in QuadrigaCX’s possession are substantially less than what was reported in Jennifer Robertson’s (wife of allegedly deceased CEO and Owner Gerry Cotten) affidavit, submitted to the Canadian courts on January 31st, 2019. 
5. At least some of the delays in delivering crypto withdrawals to customers were due to the fact that QuadrigaCX simply did not have the funds on hand at the time. In some cases, QuadrigaCX was forced to wait for enough customer deposits to be made on the exchange before processing crypto withdrawal requests by their customers. 
6. After completing the analysis, it is the author’s opinion that QuadrigaCX has not been truthful with regards to their inability to access the funds needed to honor customer withdrawal requests. In fact, it is almost impossible to believe that this is the case in lieu of the empirical evidence provided by the blockchain. 

Now this is just one person’s findings, and not to be taken as authoritative of course, but it does back up what most people are suspecting is the case already, that QuadrigaCX was operating a shell exchange or ponzi scheme. I recommend reading the detailed and extensive Medium article to learn just how that author tracked numerous wallet addresses on the blockchain to come to his conclusions. It looks brilliant.  

The potential rot runs all the way to Tether 

The QuadricCX case is an ongoing one, so more evidence keeps emerging by the day in this intriguing saga. What has also immerged is even more of a concern because, whereas we non-Canadians may have not been involved and are simply observers to the drama up north, now the trail has led to the biggest exchange in the world, namely Bitfinex and its dark horse lovechild Tether. And many of us use Tether as traders on numerous other exchanges, even if we don’t use Bitfinex. It turns out that QuadricCX was serviced by a Panama-based financial institution called CryptoCapital.Co who provides custodial and banking services to exchanges. They act as a middle man when fiat-to-crypto withdrawals are involved on the exchange. Well they are also insolvent. And this is the real point: they not only represent QuadrigaCX but also Bitfinex, CEX.io, Exmo and Coinapult. They were the custodians for five exchanges globally, the biggest, of course, being Bitfinex. And if they are insolvent, one might conclude that all five exchanges are insolvent. That is the bombshell landing in the crypto world right now. And that is why some are calling this a potential “black swan” event for crypto. You may not use any of those exchanges, but if you use Tether, then you may receive some of the fallout because Tether is the child of Bitfinex. Even on Binance, Tether is the primary trading pair after Bitcoin and Ether, and hundreds of millions of dollars are traded through Tether daily by thousands of traders.  

Is CryptoCapitalCo the real underworld kingpin? 

We all presume that Bitfinex and Binance are totally legitimate exchanges, despite the occasional rumours of pump and dump insider schemes emerging from the likes of CZ (Binance CEO), Justin Son (TRX) like their new release Bittorent. But you might ask yourself how giant exchanges like Bitfinex can get involved with companies like CryptoCapitalCo, who have a provable track record as scam artists. Apparently CryptoCapitalCo buy a company somewhere in Europe that acts as a payment processor for them. From there they proceed to open accounts in the company’s name and get a licence. They use the accounts as much as they can until they are frozen by the bank or authorities and then switch to another company and start all over. Sometimes their accounts and cash are permanently frozen or seized, but usually they get them back after three to six months. Sometimes they don’t, of course. In total they have left a trail of six previous companies so far, from Taiwan to Netherlands, Poland, USA and Switzerland. They are currently running a company with Deutsche Bank in Germany, according to sources.  

Is it a bird, is it a plane, yes it’s a black swan 

In conclusion some may say the QuadricCX exchange was a scam from the start, and now their custodian CryptoCaptitalCo is also a separate scam, or perhaps they are in cahoots. If the latter is a known scam artist, then surely Bitfinex would have known about it beforehand. If this is true then knowingly doing major deals with such criminals implicates them as criminals too. This does not look good, especially since Tether has already come under such huge suspicion in recent months. And if five exchanges globally are now involved with an insolvent financial custodian, it could lead to a black swan event like that of Mt. Gox where millions of dollars in crypto were lost to thousands of people. And such an event could also crash the price of bitcoin to another ultra low for this bear market – somewhere down to $1000 – as estimated by some technical analysts. The potential ripple effects of this Canadian Exchange scam may be about to blow up into all of our faces. Better get that fallout shelter ready, take the right precautions, try a cold wallet, try another stable coin, there are several around this year. If you have any further info on the subject please share with us in the comments below. 

Refs: https://bitcoinexchangeguide.com/cryptocapital-co-may-be-cryptos-black-swan/  https://www.reddit.com/r/BitcoinCA/comments/am3t0p/why_finding_out_quadrigacxs_cold_wallet_addresses/?utm_content=body&utm_medium=post_embed&utm_name=4e8fae9a1f2047248c8ccda2bb5ace1e&utm_source=embedly&utm_term=am3t0p  

https://medium.com/@zeroresearchproof/quadrigacx-chain-analysis-report-pt-1-bitcoin-wallets-19d3a375d389  https://www.reddit.com/r/BitcoinCA/comments/7nsslo/quadrigacx_run_by_fraudster_patryn_aka_omar/   Pic: https://www.waterstechnology.com/industry-issues-initiatives/3464301/after-building-an-ai-black-swan-detector-compellon-mulls-path-forward