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  • Writer's pictureCory Cleveland

Consider This: Crypto and the Rhymes of History

The virtual gold rush that is crypto-currency

My name is Cory, I am the President of Creative Return and the host of The Insider’s Guide To Finance. The following are my insights and learnings from the interviews and dealings I have with talented entrepreneurs, operators and financiers. I hope you find them valuable in your endeavours.

You've heard that history doesn't repeat itself, but it rhymes. Mark Twain's insightful saying is applicable to the crypto industry and sparked my interest when I came across the story of QuadrigaCX.

Much like the wild West and ensuing gold rushes in the 1800s, banks and depositories were popping up to 'securely' hold people's wealth in fiat and gold.

Sure security was primitive... six-shooters, rifles, and safes with steel walls a foot thick. Along with it came the bandits and not surprisingly, the internal bad actors who were entrusted with the keys and combinations to the vaults.

Fast forward 200 years and we've witnessed another gold rush. This time virtually as nerds and nations and all in between scrambled to access and harness the potential of crypto-currency, most notably Bitcoin.

With that rush comes the vendors of the picks and axes (servers and software) and the depositories (e-wallets and virtual exchanges). This is where the rhyming comes to play. For unscrupulous actors who get wooed by greed, elaborate plans and fraudulent acts lead to unimaginable stories like the mysterious death of Quadriga's founder, Gerald Cotten.

A Canadian resident, Cotten founded Quadriga in 2013 which at one time was Canada's largest crypto exchange. By 2017 bitcoin shot up to nearly US$20k and they were taking a cut on almost $2 billion in crypto trades.

But in the froth of the crypto euphoria, a mystery was beginning to unfold. A series of events makes any defenders of Cotten hard to believe.

In December 2018, Cotten and his newlywed visited Jaipur, India but the trip took a quick and tragic turn. It wasn't long before Cotten was admitted to the hospital and within 24 hours pronounced dead from "complications from Crohn’s disease".

It didn't take long for word to spread of his death. What amplified the news was that Cotten died being the only one who held the passwords to encrypted vaults controlled by Quadriga. This left 115,000 users stranded from accessing their crypto as roughly a quarter billion dollars in crypto was no longer accessible.

This loss compelled an army of tech-savvy amateur sleuths to investigate why and how this happened. Two main theories arose; the "Mastermind Theory" and the "Royal Fuckup Theory" as Vanity Fair puts it.

Under the Mastermind Theory, interesting points were raised. Like the fact that Cotten made a will just weeks before leaving. Then rumors swirled about faking his death in a part of the world where you could buy a fraudulent demise. Or that his wife used up to three different surnames in her dealings and Cotten's furious trading on other exchanges near his demise which the FBI flagged as potential laundering.

When you look at the reporting of the matter, it is clear that Cotten died. Or is it? The RCMP and the FBI refused to comment, but some of those close to Quadriga have the impression that they believe Cotten might still be alive. With nobody confirmed as Cotten's and nearly a quarter billion at 2018/2019 valuations gone, investigators see his actual death as an open question.

We may never know what actually transpired and if Cotten is alive or dead. More interesting to me is how this is another rhyme in history.

Perhaps this is best said by the Ontario Securities Commission. "What happened at Quadriga was an old-fashioned fraud wrapped in modern technology,"

How did this story come to mind? I was having a conversation with a friend of ours who lost eleven bitcoin (peak value of $880k) by having them held, albeit temporarily, in a Quadriga account. Boom! Gone!

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