Unchained - Is Quadriga's Gerald Cotten Still Alive? The 'Exit Scam' Podcast Aims to Answer - Ep.248

Starting point is 00:00:00 Hi, everyone. Welcome to Unchained. You're a no-hype resource for all things Crypto. I'm your host, Laura Shin, a journalist with over two decades of experience. I started Kevin Crypto six years ago, and as a senior editor of Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the June 22nd episode of Unchained. Conjure brings any asset you want onto Ethereum by allowing for users to create synthetic assets which track other markets. With zero-interest loans and unlimited assets, it's helping Defi to keep. consume trad-5. That's C-O-N-J-U-R-E dot finance. Check it out. The Crypto.com app lets you buy, earn, earn and spend crypto all in one place. Earn up to 8.5% interest on your Bitcoin and 14% interest on your stable coins, paid weekly. Download the Crypto.com app and get $25 with the code Laura. The link is in the description. TASOS is smart money. That's redefining what it means to hold and exchange value in a digitally connected world. Discover how people are reimagining the world around you on Tezos.

Starting point is 00:01:06 Today's guest is Aaron Lamer, the host and producer of the podcast series Exit Scam, which is all about Quadriga CX. Welcome, Aaron. Hi. Glad to be here. I'm a listener. Thanks for listening. So Exit Scam has been this pretty amazing podcast series that you've put out.

Starting point is 00:01:26 Why don't you give us a short synopsis of, what it's all about. Well, I think people who are religious listeners to the show will have heard about Quadriga before. I think your piece with Taylor Monaghan has to have been one of the first big podcast things about Quadriga. So for a little recap, Quadriga was a Canadian Bitcoin Exchange. It was the largest Bitcoin exchange in Canada.

Starting point is 00:01:54 and it collapsed in early 2019 after the founder, Gerald Cotton, died in India. And his death was somewhat mysterious to begin with and got even more mysterious when it was revealed that he had not left behind the passwords to unlock Quadriga's cold storage wallets. And then it got even more mysterious when some blockchain-fetchum, forensics by people like Taylor Monaghan actually revealed that not only were these cold storage wallets locked, they were empty and had been so for some time. So what we really did with the show was trying to solve two mysteries. What really happened to Gerald Cotton, the founder, and what happened to all of that money that was missing? So before we dive into all the various rapid holes that you went down to try to solve these questions.

Starting point is 00:02:54 Why don't you tell us a little bit about your background? What were you doing before? How did you come to do this podcast series, et cetera? So I'm one of the founders of longforum.org, which is a journalism aggregator for old people who were on the internet 10 years ago. You may remember when it was difficult to find reading material on your phone. So we were kind of trying to fill that niche. Through long form, I ended up starting to do the long form podcast, which is how I got into podcasting.

Starting point is 00:03:25 Which, by the way, is one of my favorite podcasts for listeners. If any of you are media people, you should definitely check it out. But anyway. Yeah. Yeah. For the four people who listen to the show who don't hate journalism, it's a great resource. And through that, I got really into podcasting. And I always like doing podcasts about my own interests.

Starting point is 00:03:47 Like, I'm not like the kind of person who can just get a sign. something. I kind of have to be into it myself. And I got really into crypto in about, I guess in 2017, I started getting into crypto. And part of my way of getting into things is to show them to other people. And I started shilling crypto to my friend Jay Kang, who I knew was kind of vulnerable to it because he's a poker player and kind of a gambler. And that's always a good person to shell crypto to. So I got him really into it. it. And we did this show called Coin Talk, which I guess ran for about a year, a year and a half, basically until Jay had to start writing his book. And that show was about crypto, but

Starting point is 00:04:33 not the most serious show about crypto. I would say we kind of went into it knowing not very much, got a lot of things wrong, tried to learn as we go. We kind of tried to take an experiential approach to crypto. So we were doing things like I had a market on. on Auger when Auger was first out about whether Donald Trump pee tapes would be would come. We were just kind of like doing all sorts of fun things you could do. And pretty much the most, the thing that grabbed me the most over and over in crypto were the charlatans, the scammers, the people who did really outlandish Wild West stuff in crypto.

Starting point is 00:05:17 And I know that a lot of crypto kind of wants to sweep those people under the rug and say they don't exist or there are a few bad apples that don't represent the whole space. For me, that's the stuff. That stuff really kind of interests me. Like, I don't know if I'm an amoral person or what, but I've always been fascinated by that stuff. And basically, when Quadriga happened, we were still doing the show. I was like, there's just never going to be a story that tops this. Like, as a connoisseur of the crypto scam, this one is just on the Mount Rushmore of crypto scams.

Starting point is 00:05:53 Not because of its scale, you know, there's been bigger exit scams. Even Mount Gonx was bigger. But simply the audacity of the whole thing and how many different competing mysteries there were all kind of circling around this one person who honestly, people didn't know that much about. You know, a lot of these founders, a lot of these founders have been on your show. You know, there are people who are out and about and kind of promoting themselves. Gerald Cotton wasn't really like that. He was kind of an enigma. When we started looking into him, there was only a couple of pieces of audio of him talking, a few videos on YouTube. He was really

Starting point is 00:06:37 like a kind of ghost as a figure, which made it difficult to figure out much about, what really happened to him. So tell us a little bit more about him, kind of, you know, what his life was like and also what his lifestyle was like before he died. So he was living the high life. He was a big international traveler, private jets all around the world.

Starting point is 00:07:06 There's some insinuations that on a lot of those private jets, he was carrying large amounts of cash and that his trips may not have been purely tourism, but involve moving money around the world. And I have some theories about that. And when you say that who are your sources? The source is one of the guys who was part of the flight center where he would fly. He was into flying private planes.

Starting point is 00:07:34 And people who saw him, including this guy in private airports, said, yeah, he would often have a duffel bag full of money. I mean, I have a photograph of $1 million of cash on his counter. And I can tell you definitively where that cash came from and how it came to be on his counter. He had these deals with ATM operators in which he would trade them Bitcoin for cash. And they would show up to his house or to a private airport with a large sum of cash. The stuff I'm describing isn't even contentious.

Starting point is 00:08:08 this is in the Ontario Securities Commission's report. In fact, that photograph is in the Ontario Security Commission's report. But going back further, and I think this was something I was actually really kind of excited to talk about on the show, Gerald had roots in the pre-Bitcoin digital currency world. Another thing that crypto people like to sweep under the rug, but is a fascinating history of these centralized pre-Bitcoin. coin digital currencies. Liberty Reserve is probably the most famous one, Egold before that. And the way that Gerald got involved in those was he was running Ponzi schemes as a teenager.

Starting point is 00:08:51 And you couldn't buy into those Ponzi schemes with PayPal. You needed to use these digital currencies to buy in. And at some point, he jumped from scamming people using these digital currencies to being an exchanger himself. He started an exchange called Midas Gold that was run by his future Quadriga co-founder, Michael Patron, at that point, I believe, using a different name. And they ran a Liberty Reserve Exchange. And you can see these interviews with Gerald Cotton, where he says, I have 10 years experience in the digital currency space. And this is when Bitcoin is only five or six years old. So if you were reading between the lines and you knew enough about the real history of this stuff, you would know that he was involved in it before.

Starting point is 00:09:38 Bitcoin, which gave him this interesting leg up on anyone who wanted to start an exchange. There was all of these, you know, guys at Bitcoin meetups who could talk a big game, but they hadn't really done what it takes to run an exchange, which is a very bizarre, specific skill set. So he started off in that world and successfully transitioned into Bitcoin exchanging. But the stuff he was exposed to in those days is some pretty dark, criminal stuff. That's kind of what was going on on Liberty Reserve. A lot of money laundering, cartels were involved, and a lot of scamming. I would say, scamming is the dominant theme in all of this history. And when you say that, how do you know it's a scam? It's what, like, what was he doing

Starting point is 00:10:31 exactly? So he was involved in these things called high yield investment programs. There was a very popular forum called Pop Gold that they were operated on. And that's where he met most of his friends. That's where he met the future founder of Quadriga. You can actually go back on this forum and Wayback Machine and see them interacting with each other when Gerald is 15 years old and his co-founder, Mike, is 20, 19 or 20. And so he was operating these high yield investment programs, which accepted Eagle to buy in. And the way that these high-yield, high yield investment programs operated, it may be familiar to some people who are kind of gambling on algorithmic stable coins at this time. Basically, people would buy in and would be, would get,

Starting point is 00:11:22 the first people would get paid out fairly outrageous returns, and then the thing would collapse, and the person operating it anonymously would disappear. And this is something Jerry did many, many times as a teenager. And we know that people who knew him were kind of weirded out. They said, where is he getting all this money? Well, now we know where he was getting that money. He was running these high yield investment programs, which I would just refer to as Ponzi schemes.

Starting point is 00:11:49 They're very low-level internet Ponzi schemes in which I would argue much like algorithmic stable coins. A lot of the people who are buying in are kind of aware that they're involved in something sketchy that's probably eventually going to collapse. And the gambling part is whether you get out before the whole thing collapses. And Jerry at some point jumped from running those schemes to realizing you could probably make more money selling the digital currency that was going into these schemes and got into exchanging. And it's a really interesting period. In some of my research, there are forum posts by Satoshi Nakamoto in which he talks about Liberty Reserve

Starting point is 00:12:35 and proposes a Liberty Reserve Bitcoin trading pair. This is before there would have been any fiat on ramps into Bitcoin. Liberty Reserve was considered kind of as like maybe we can use it as our tether, basically, as we're getting Bitcoin off the ground. Now, I have no indication that there actually ever was Bitcoin Liberty Reserve trading. Liberty Reserve was shut down in 2013. So it actually ended up being kind of the last gasp of centralized digital currencies before Bitcoin came onto the scene. Okay.

Starting point is 00:13:10 So here we have this larger-than-life character with this sketchy background, although all this comes out later. This was not known at the time. Tell us a little bit about kind of Kodriga's story and status at the time of his supposed death. So Quadriga had become the biggest Bitcoin exchange in Canada, kind of by accident. I think CA Vertex was previously the biggest exchange in Canada, and CIA Vertex shut down. And there's kind of different stories about exactly why CA Vertex shut down. It was hacked. They lost money.

Starting point is 00:13:49 And then I believe it was also absorbed into Cracken in some way. Is that right? Do you remember that history at all? I did read that when I was doing research for this show, but yeah, I don't know the details. So Quadriga shot up and became the number one Bitcoin exchange in Canada. And when you talk to a lot of people about why they trusted Quadriga, they'll cite that it was the biggest Bitcoin exchange in Canada. There's a lot of circular logic like this in crypto. And another reason people will cite why they trusted it is that it was run by a Canadian guy.

Starting point is 00:14:23 and people in Canada liked trusting their money to a fellow Canadian. So Gerald had all of these things working for him, you know, in that way. But beyond that, there was really very little known about Quadriga. We know now that it was based on white label software called W-L-L-O-X, that was originally developed by crypto capital. which is a whole other scandal. Right. For listeners who may not recall that was the company that Tether made the loan to and didn't get its money back. I forget the amount, but it was a huge amount, my $860 million or something.

Starting point is 00:15:12 No, I don't remember. Or maybe that was what they had after. Anyway, okay, so I don't know the amount, but they had a huge amount that got tied up with crypto capital. And that's how Tethers reserves ended up. being less than what they should have been. We couldn't even get into this in the show because we had so much we needed to get into about Gerald Cotton, but there's a whole other story about the payment processors that Quadriga was using, many of whom froze money and had large sums of Quadriga's money

Starting point is 00:15:42 at the time it shut down. And crypto capital is definitely part of that story. But also they made this white label exchange software. So in retrospect, it looks kind of like, a very small team of people used white label software to put up an exchange that people perceived to be a legit, you know, big time exchange. But once you sort of peeled back that layer of reality, you pretty much realized it was just Gerald Cotton pretty much running it by himself with a couple, maybe like a team of like two or three people who were really involved. And then he had hired some like customer service reps, but these were people who had never met him who were just, you know, responding to support tickets, basically. In terms of like power and access to the money, it was pretty much just Gerald Cotton. And so earlier you talked about how one of the mysteries is what happened to the money. So once he died, kind of fill us in from that moment until the discovery that, you know, most of the money was gone.

Starting point is 00:16:49 So the missing sum or the sum that customers had on the exchange at the time it shut down was about $215 million Canadian. And that was a combination of Bitcoin, Ether, Canadian dollars, which they called quad bucks in the Quattriga system, and maybe a little bit of some other altcoins that were traded. but it was primarily those three things. And, you know, in terms of the quad bucks, it was very difficult to know where they were because there was no information about where Jariat had bank accounts even. So that mystery was kind of a like, whoa, we don't know anything here. But in terms of the Bitcoin and Ethereum, they should have been in a wallet somewhere that someone could pretty easily find. And it turned out that people who ran other exchanges or wallets,

Starting point is 00:17:48 kind of have a good insight into that, right? Because they had interacted with Quadriga wallets. And so they were able to pretty quickly discern what might be Quadriga's cold storage wallets. And by hopping from wallet to wallet, people were able to sort of map out some of the major Quadriga wallets. And very early, like honestly, if you look on Reddit, it does not take people very long. Now, those people didn't know for sure, but people had the suspicion very early that there was no money in these wallets. And in fact that those wallets had been emptied out more than six months before Gerald Cotton took this honeymoon trip to India that he died on. So immediately there was another mystery, which was why had these wallets been cleaned out

Starting point is 00:18:36 six months earlier and where was that money now? And depending on how much we want to spoiler it, I can get into a little bit more where that money ended up. But early on, it was just kind of, well, it's not here. It's not anywhere we can see. Yeah, well, so my feeling about this is that probably most of my audience knows this story. So I do feel that for anybody who has not listened to Exit Scam, that you should stop the recording, or stop the... Just a hit pause, pause and keep your location and then come back to it. listen to all the episodes, which by the time this comes out, oh, yeah, they will all be out,

Starting point is 00:19:21 right? Yeah. They'll all be out on Odyssey, which is a new app that I guess Exit Scam has partnered with, and it's spelled A-U-D-A-C-Y. I think on all the other platforms it's just a week behind. Yeah, so the last episode comes out on Monday in Odyssey and then a week from Monday. If you start binging now, you're going to be timed perfectly to just go right into the ending. Yes. So then you can come back and listen to the rest of the show. But I do actually want to get into

Starting point is 00:19:50 those details because I do feel like probably most of my audience has been following this for a while. I mean, one thing that I will have to say when you talk about how quick on Reddit people jump to notice that the cold storage wallet seemed to have been emptied, I remember that that day, one of my sources texted me about this. And I really think I should look back at what the message actually says, but within like a very brief period, like an hour or something, you know, he was just like, you know, there's something fishy here. And yeah, I'll have to look at exactly what that says. But it's just fascinating how right away everybody kind of picked up that there was something wrong. And so what were the other like hints at that time that this may not

Starting point is 00:20:38 just be a normal person who randomly died, you know, by accident? Well, this was an interesting thing when I started talking to people. People at first were like, oh, this came out of left field. We had no idea. Then I started talking to some people who were a little bit better plugged in in crypto. And people said, well, actually people had been warning me for several months that I ought to get my coins off of Quadriga. So this was not a total secret that something was wrong at Quadriga. And in fact, if you go back through the Reddit history, you can see people saying,

Starting point is 00:21:13 I can't withdraw from Quadriga. I put in the withdrawal request two months ago. It hasn't been paid out, and I'm getting no response. Wow. And this is difficult to parse because, you know, I want to be fair. You can find similar complaints at the Coinbase subreddit, and Coinbase wasn't on the verge of collapse. But looking backwards, you start to see a pattern where basically they stop paying out

Starting point is 00:21:38 withdrawals. They're still taking in money, but they're not putting out any money. And this pattern actually extended for the month after Gerald Cotton died. So after he died, Quadriga waited a month to announce his death. During this month, people were still putting crypto, we're still putting dollars, basically, into the system. But anyone who tried to withdraw their money wouldn't be able to. So you had people putting on money to buy Bitcoin, trying to immediately withdraw Bitcoin

Starting point is 00:22:07 and having it frozen on the exchange. So I put a kind of an asterisk when people are like, yeah, well, dumb asses like leaving their money on exchange, like they got what they deserved. Some of these people had no intention to leave their money on the exchange. They simply didn't realize that they were putting money into a slot machine that had already had the power plug pulled from it. And that's even true before Gerald Cotton died. People who thought that they could be on the exchange just to make a trade were unable to get the money off. So finally they announced that he is dad. And then people kind of rewind through the last year and see a lot of red flags.

Starting point is 00:22:52 A lot of indication that Quadriga didn't have the money to pay out its withdrawals. And that some of Gerald Cotton's actions kind of look like a person who was maybe at the end of. some kind of a scheme. He had told his head of customer service that he wanted to retire and give the business over to him. There's just various indications that he didn't see himself being the person running this exchange for the long run, which is generally a big red flag with an exchange. You don't want to be at an exchange that the person running it is planning to take off sometime soon. Yeah, well, especially now, I think people will be on the lookout for that. So we briefly did cover his co-founder, Michael Patron.

Starting point is 00:23:47 But why don't you just explained what happened to the relationship, just so it's clear why at this point it was really just about Jerry? So Michael Patron and Jerry started Quadriga together. Michael Patron's a little older than Jerry. And I think he kind of represented himself as the veteran businessman. man and Jerry is the young wonder kid kind of. They actually intended at one point to take Quadriga public. They were going to do, it's not actually an IPO.

Starting point is 00:24:16 It's sort of a reverse takeover where they would get a shell. And anyway, in retrospect, that seems totally nuts. I mean, I think their revenue at the time was like $22,000 a quarter or something like that. And the plan for whatever reason failed. And they had a big fight after this. From what I understand, the fight may have been about Jerry sort of sabotaging the going public idea. But there's some dissent about that, about exactly what they were fighting about. But both of them agreed that they had a big fight and that Mike quit the company and left.

Starting point is 00:24:55 And the whole board actually took off too. Mike had kind of installed his own board there. So from that point forward for the last two or three years of Quadriga, it was basically just Jerry. And that was kind of the last point there was anyone else looking at what was going on. And from that point forward, you pretty much see Jerry starting to leach money in crypto off of the exchange, either into his own pocket or onto other exchanges where he started getting involved in, you know, March and trading shit coins. stuff like that. But tell us about the Chris Marqueh account. So one of the big mysteries had been sort of how Jerry managed to get all this money

Starting point is 00:25:40 off of the exchange without being detected. It turned out that he was creating these fake user accounts in the Quadriga system. One of the great dangers about crypto is that you've got this real system, which is the blockchain that's immutable, that if you see a coin on the blockchain, chain, you know what's real and you know it's someone really possesses it. And then you have this quad bucks system that only existed in the CMS of Quadriga. It's just a number, right? It doesn't literally represent a dollar in the bank account. Well, I didn't realize that this whole thing would have so many tetherish undertones to it. But I'm not talking about tether right now.

Starting point is 00:26:24 I'm talking about Quadriga. So in the case of Quadriga, $1 in the Quadriga CMA, could have any relationship to $1 in a bank account. So what Gerald started doing was crediting these fake user accounts with large numbers of quad bucks. I think Chris Marque was ultimately credited over $500 million worth of quad bucks. And then he would use these quad bucks, which were backed by nothing and were totally fictional, like Chris Marquet, which was the name on these accounts, to buy up real, cryptocurrency that was held by people on the exchange. And he didn't do this selectively. He did this industrially. He was the largest trader on Quadriga. By some estimates, he did over 30% of

Starting point is 00:27:16 the overall trading. So this actually had a dual benefit to him. Not only was he getting people's real crypto with fake dollars, he was also boosting the volume of Quadriga. So early on when Quadriga would claim that they had the most volume of any exchange in Canada, you have to remember that 30% of that volume is the founder trading against his own clients. And another thing people saw then was that there was often a premium on the price of Bitcoin on Quadriga. People would pay more for Bitcoin on Quadriga. And this is something that people were lured into Quadriga. International customers would see that. this ARB opportunity on Quadriga.

Starting point is 00:28:01 So why was the price of Bitcoin higher on Quadriga? Because there was always a guy who always had money to buy your Bitcoin for more and more. And his name was Chris Marque. Chris Marke was driving a localized kimchi premium. It was not as an extreme of spread as the kimchi premium. But you don't need a huge spread to draw new clients in. If the spread is it's 1% higher on Quadriga, That's a great incentive if you're anywhere in the world and want to go sell Bitcoin.

Starting point is 00:28:33 And in fact, one of the biggest internet detectives on this case, who's anonymous QCXN, that's how he ended up having money on Quadriga. He's not Canadian. He's a trader who was seeking out arbitrage opportunities, and that was how he ended up having money on Quadriga. So ironically, some of the biggest volume accounts on Quadriga weren't actually Canadians. They were people who wanted to take advantage of this guy who just loved buying everyone's crypto all the time. Oh, okay.

Starting point is 00:29:06 That makes a lot of sense because when I was listening to the show, he sounds Australian. He's Australian. Oh, okay. I probably should have explained that, but it was like a weird, I was like, I don't want to docks you, but you're pretty obviously Australian if we use your voice. Well, you know, I mean, he could have immigrated to Canada or whatever, but anyway, okay. Totally. All right. So in a moment, we're going to talk about Gerald Cotton's death.

Starting point is 00:29:32 And I'm going to use air quotes here. This is, or maybe it should be a question mark. Alleged death. Yeah. But first a quick word from the sponsors who make this show possible. With over 10 million users, crypto.com is the easiest place to buy and sell over 90 cryptocurrencies. Download the crypto.com app now and get $25 with the code Laura. If you're a hodler, crypto.com earn pays into.

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Starting point is 00:31:52 So tell us the circumstances surrounding Gerald Cotton's death. So in the last few months of his life, he got married, signed a new will that left everything to his new wife, and they took a honeymoon trip to India. It was actually a dual honeymoon trip, and they had donated money to have this orphanage belt in an Indian village. So the trip was supposed to take them around India for a period, and then they were supposed to go to the grand opening of this orphanage. but before they got there, he landed in Jaipur and he started having stomach pains. He had Crohn's disease and was being treated for it. They decided it was serious enough that he needed to go to the hospital. And he spent the night at the hospital and died the next day.

Starting point is 00:32:48 And that was basically going in everything we knew about his death, was that it was this sort of sudden tragedy in India. And so tell us some of the other facts that came up that, you know, led people to question whether or not he actually died. I think the will was one of the first suspicious things, that it was filled out only three days before he took off, and that it meant that his wife, who had only been married to a few months,

Starting point is 00:33:22 was going to inherit over $10 million worth of real estate in Canada. That alone, I think, would have set off a fair amount of suspicion. But the fact that those cold storage wallets were empty really ramped up the suspicion. And there was certainly the question of whether someone could have fake their death in India. There is a real industry in India that helps Westerners fake their deaths. Now, most of those people are doing insurance fraud. It's for different ends than Jerry would have. But the apparatus was there and realizing that Jerry had these dark web connections and had been involved in this kind of shady money laundering underworld stuff, at least for me, convinced me that if he had wanted to fake his death, he would have had the right tool set to do so.

Starting point is 00:34:20 That doesn't mean he did. we didn't we didn't really early on have much else to go on you know if he did fake his death no one had figured out where he went um we knew that there was this large sum of money missing from quadriga and that was also a relevant piece of evidence was well if he really is dead then where is all this money where did all the money go right even if you accepted that he had died a natural death you had to account for um you know something like $80 million that was still unaccounted for. So all of those factors, I think, made people suspicious that he was really dead.

Starting point is 00:35:02 It seemed like too great a coincidence. Yeah, and there were a few other details where, so I can't remember who this person was, but there was somebody in India who was asked to embalm the body, and she refused for some reason. Can you explain that? Yeah, I mean, what we know about what happened in India is really just from going and asking each person along the way who encountered Jerry's body. And the person who was first asked to embalm his body, his body had been brought there by two employees of the hotel that he and his wife had been staying at. And she felt like this was a non-standard way that a body would come to her embalming center, her embalming college. I think it's

Starting point is 00:35:57 actually a college. And so she refused to embalm the body. And she gave, you know, you can hear the explanation she gave for it. And then it went to a different embalmers and that embalmer gladly embalmed the body and sent it on. I don't think that this is definitive. proof that something sketchy happened. But basically, you know, we wanted to know whether any of this stuff looked unusual from the perspective of people in India who were actually there when it actually happened. And this is kind of the first wrinkle in that story where someone says, no, actually it was kind of non-standard what happened. It did raise my suspicion at the time. I will say that a counterpoint is that the person who was the second person who did

Starting point is 00:36:52 embalm, who did successfully embalm him, had a copy of his passport, you know, there when someone went and checked and confirmed, yes, I embalmed him and he was the guy. He looked like the person. So it's confusing. Okay. Okay. Okay. Because there was something in the description where I was like, oh, it would be so useful

Starting point is 00:37:16 if bodies were, you know, like blockchain-based tokens where you could check the provenance because there was something about kind of, yeah, the chain of transfer where it did raise questions about whose body was actually being moved. So one of the more intriguing episodes or interviews you did was with this person who investigates people who fake their own deaths. And I wondered, so what were some of the other things that he picked up on that kind of lent credence to the theory that Gerald Cotton could have faked his own death? Well, you know, one thing that people have said is when there's this much money at stake, you want a body or you want DNA.

Starting point is 00:37:59 And we looked very closely to try to show that anyone had confirmed that this was the right body and the right coffin. We thought, originally we thought, oh, like they would have checked it at the airport or when was coming through customs. And we talked to Canadian authorities who said, well, actually, if there's no suspicion of foul play or anything unusual, you know, if it's just a tourist coming back, there's nothing in the law that says we're going to force you to open this coffin and take a fingerprint or a DNA test. So we were able to find no proof that such a thing had actually happened. And for Rombom, Stephen Rombom, who's the death faking PI, you know, his tact is that you should just sort of be suspicious of everything. And that until someone has proven any of this stuff, it merits further investigation.

Starting point is 00:38:55 And, you know, certainly in his case, he's seen situations where people confirm the death, you know, whether it's local police or medical staff. And this isn't just in India. This is all over the world. This Philippines is a place. This happens a lot. He talked about a case in Mongolia. So, you know, some of the things that are these basic checks that Tamir, like, oh, like his doctor, his doctor couldn't be lying. Well, you know, when you talk to a guy who's an expert in his stuff, he'll say, no, no, his doctor could be lying, you know, that he's actually dealt with a lot of cases where this stuff has come up.

Starting point is 00:39:34 And, you know, one of the things that was very relevant to him was Jerry's past as a scammer and the fact that he had an organized life history of these kind of deceptions and they follow a pattern. Gets a bunch of people to give him money. He makes excuses and then he disappeared. And this fit into that pattern. So it's a little bit like, you know, if someone who is a suspect in a murder, you find out that 20 years. years ago they were accused of a similar murder. That's not in any way grounds to convict them, but it is kind of the point where you're like, yeah, we really would like that DNA confirmation, you know? Yeah. And some of the other things that fascinated me was he described how somebody

Starting point is 00:40:22 who had the kind of like means and skills that Gerald Cotton had could have faked their own death and truly be alive now. And he talked about how, because Jerry knew. how to fly his own planes, and those wouldn't necessarily have to go through the normal kind of like border control or customs or whatever it might be, or even his sailing capabilities, that all those things would enable him to kind of live out life on the rest of the planet without encountering the kind of authorities who might pull him in for questioning. So can you, is there anything more to add other than those details I mentioned? I would say not to mention his deep experience with VPNs and Torr and cloaking his, where he was online, an ability to move funds across bank accounts and crypto accounts.

Starting point is 00:41:17 I mean, look, the hardest thing about faking your death from what I understand. And I'm not talking specifically about Jerry. This is just I learned a lot about people who successfully fake their death is you need a new identity set up somewhere else. and it's got to be all waiting for you. If you're trying to set this up after you've faked your death, you're in trouble. So you need a passport. You need a place to stay. You need a local bank account that is already funded with money.

Starting point is 00:41:47 And all of this is the kind of stuff that Jerry was really experienced with it. You know, moving money across international borders. You're right. Private airports are great for that. Did he stash money at casinos? We know that he frequented international. Casinos. One of the things I learned that is a way to stash some money in another country is to go to the casino and deposit a lot of money and then get back a claim ticket that you have money sitting

Starting point is 00:42:15 at the casino. All of these techniques would be useful to someone who wanted to start a new life somewhere else that had no connection to his old life. Certainly privacy coins would be something I would think about in that situation. And we know that Gerald was interested in privacy coins and was actually a big Zcash holder at one point. So again, these are all skills that rather than actual evidence that he is living a new life. But when you really think about it, there's not that many people who have all of these skills who could even try something like this. You know, he was an early Bitcoin holder during the Silk Road era. Well, one of the big things sold on Silk Road and a lot of Darknats is fake passports, fake identification.

Starting point is 00:43:06 All of these things would have been useful if he did decide that he was going to do something like this. I think the flip side of all this is that Quadriga was almost out of money. And so he was on the verge of being revealed. You know, at a certain point, people weren't just going to post on Reddit about how they hadn't got their withdrawal. People were going to do something about it. So there was kind of a perfect storm of pressure coming down on him that he needed to do something. He needed to get out of the situation he was in because, you know, if you just look at the course of 2018, there's the big market crash. that pretty much wipes out almost all the money that he's been gambling on behalf of his customers.

Starting point is 00:43:51 And people start pulling their money off of the exchange. So a bare market and a crash are very bad for someone running a fractional reserve Ponzi. As soon as more people are pulling out than are putting in, you're in trouble. As long as there's a bull market, you're kind of fine. You can just assume more people are going to want to buy than are going to want to withdraw. But as the ocean started to pull back there, I think he would have found himself quite exposed. And in fact, he actually funded money back into Quadriga in the last few months. So money had already embezzled out.

Starting point is 00:44:28 He started funding back into the exchange simply so that it could pay out some of these withdrawals. And where was that coming from? That's, I believe, also in the Ontario Securities Exchange report. So they basically have a sum of all of the money that he took off the exchange. And then they show actually some money came back in about $10 million over the last few months. He was a lot. And I know he was also really waiting for the CIBC to unfro-they had about $26 million worth of the money frozen in bank accounts. And he was eagerly awaiting that money getting unfrozen so he could use it to pay out with thralls.

Starting point is 00:45:06 And it actually got unfrozen just before he died, like a couple of times. days before he died. So if the private investigator who investigates people who affect their death, once he kind of looked at all the evidence, did he say what he really thought that, you know, like where would he put the odds that jury's alive or dead? You know, I mean, he thought it was very suspicious. I believe the phrase he used is every red flag you can raise. he's managed to raise that red flag.

Starting point is 00:45:42 Now, whether that means the red flag of he faked his death or the red flag of this merits investigation, I think that's ambiguous. He never gave me like a percentage chance that he was alive or dead. He looked at it more like, you know, as an insurance investigator, you either investigate or you don't investigate, you know, when someone files a claim. You're like, oh, this one, this is the one that you send the A team on. This is the one you really, really want to look into. And, you know, when I interviewed him, it was actually only probably closer to a year after this happened.

Starting point is 00:46:21 And now it's two and a half years, which, you know, the longer it goes without something happening, that also could be seen as some form of evidence. You know, the longer Jerry goes without getting caught, you know, I do think that there's a very real, chance that he is really dead. And if that's true, and this is kind of the conclusion of the show, so double spoiler alert if you're still listening, my view is that he was performing an exit scam either way, that we basically factually know that he had taken a lot of money out of Quadriga and was planning to try to escape the consequences of doing so. whether that was by faking his death or he happened to be in the middle of that and he

Starting point is 00:47:11 suffered this bizarre, tragic, natural accidental death. In both cases, I think his motivation was actually kind of the same. I mean, it's almost like him dying in the middle of it is even greater coincidence or even more improbable. It's a bit like if Bernie Madoff had had a heart attack the night before they busted in his office and arrested him. Again, I think people would have probably never accepted that that really happened, just like people will probably never accept that Epstein died by suicide or, you know, a lot of these other come on. This coincidence is too crazy kind of stories. Yeah. Well, yeah, I mean, this gets really dark, but I did think, well, if he really did die, it could be because he obtained some.

Starting point is 00:48:02 substance that enabled him to get ill in such a way that it would look like he died of, you know, the causes that the doctor said. That is something we like looked into. I mean, murder or poisoning by murder or suicide is something we considered. And I also considered the fact that someone who had just committed one of the biggest crimes in Canadian financial history has existing health problems and is $200 million dollars in debt. That's not healthy. It could give you an ulcer, believing that people were on your trail. So, um, yeah, although, um, it was that, it was something like his body had gone into

Starting point is 00:48:44 sepsis, like he had, he had some infection in that cause heart attacks. And then he died from that. Wasn't that the, I mean, technically he died of cardiac arrest, but his death was consistent with complications from Crohn's disease. He had a perforation. his intestine. Oh. And which later caused him to go into cardiac arrest. So from what I've heard from talking to doctors, his death was, at least as documented by his doctors, was consistent with a way a 30-year-old could die of Crohn's disease. It is unusual for a 30-year-old to die of Crohn's disease, but it is possible. And, you know, we actually have some information that he had had previous medical breakdowns that had required intervention. So he, you know, he would have been

Starting point is 00:49:33 aware that he had a troublesome health situation. Well, okay. Yeah, it's just with the timing, you know, shortly after his will. So, you know, a lot of the customers of Quadriga did ask that the body be exhumed. And it looks like that's not going to happen, which is surprising. So can you talk a little bit about that situation? Yeah, so there's a group of creditors who are represented by lawyers, and they have their lawyers basically send a letter to the RCMP, requesting that they exhumed Gerald's body and do DNA testing to prove that whatever is in his coffin is really him. And the crypto press picked up on this as if it was like a sure thing. They're like, they're digging him up, which it, it turns out, was a little bit premature because the Royal Canadian Mounted Police have no obligation to listen to a letter of this kind. It has no real leaguer stature.

Starting point is 00:50:36 It's like if I sent you a letter that said, I want you to have this guest on your podcast. You could consider it, but you don't have to do it. And in fact, from what I understand, the Rail Canadian Mounted Post, police are kind of loath to investigate this case any further in terms of him faking his death, period. They believe, from what I've been told, that he is really dead. They're satisfied. It's possible that they have information that I don't have that proves he's dead.

Starting point is 00:51:10 That's a real possibility that we've always sort of had out there is maybe the reason law enforcement doesn't want to dig him up or investigate this further is they actually know something that we don't know. but from what I understand, the chances of that body getting exhumed are very low. People have put it as below 1% to me. So while it would help me finish my story, it doesn't look like it's happening. Yeah, I have to say, frankly, their decision does boggle the mind, at least in my opinion. But you're right, maybe they know something we don't know.

Starting point is 00:51:45 But there's, we're just going to run through all the spoilers because of what of the more intriguing episodes was the one you did on Jennifer Robertson, Gerald Cotton's wife slash widow. And there were a couple of things after she returned back from India that I found really suspicious slash notable. But one of them was about how his desk had been cleaned up while they were in India. Can you talk about that? And I almost didn't even really know what the show was kind of implying there. So what was the significance of that? Well, I don't mean to imply anything specifically other than the facts. So I'll run through the facts, which are that after Jerry died in India,

Starting point is 00:52:30 before Jen returned to their house with the coffin, a group of people were in the house, Jerry's parents, and I believe his brother and his sister-in-law. And when Jen got back, everyone wanted to look for this password, because at this point, they were still believed that there was $215 million and these cold storage wallets. So they tore the house upside down, like they cut open furniture even, basically trying to find anywhere that Jerry might have left this password.

Starting point is 00:53:04 And one of the biggest beliefs was that maybe it was in Jerry's safe, because he had a safe in his house. And he had espoused the use of paper wallets repeatedly. He said, the best way to keep your private keys is with paper wallets. I use paper wallets and I have the safe in my house where I keep my valuables. Occam's razor was, if these passwords are anywhere as paper wallets, they're probably in the safe. So the safe was in his attic and it was bolted to the rafters. So basically when the first time anyone from the outside went came into the house, these are are things they said. They said that Jerry's office, which had a reputation of being messy and

Starting point is 00:53:49 full of papers, had been cleaned up, and it appeared that things that had previously been inside it were gone. And the safe, which had previously been bolted to the attic, was found on the floor of his home office, and it was open, and it was empty. But wait, I don't understand because doesn't that mean that the family could have gone through all those things? Right? That's right, yes. But is that suspicious? I don't feel like I'm connecting all the dots.

Starting point is 00:54:21 Well, if there was a password written down, anyone who was in the house, which is a small list of people, could have ended up with that password before investigators were on the scene. I offer that with no specific implication. But, you know, when people say, so it was believed that Gerald had a personal cryptocurrency stash, which is referred to as his nest egg. We know that he was a pre-sale Ethereum buyer. He had a large amount of personal Ethereum. He was friendly with Vitalik, actually. You know, he was working out of Decentral Toronto. at the same time as Ethereum was getting off the ground there.

Starting point is 00:55:11 So my only implication in bringing up the home office and his safe was that while people were looking for this stuff, they could have found private keys to wallets that contain cryptocurrency. And it's unclear if they did whether they would have disclosed that to anyone. This was before anyone who was investigating. This was before anyone knew Gerald was dead. So these are all things that happened in the period between when he died and when anyone from the public knew that he was dead. And if he did die, I think it does merit investigation what happened to this private cryptocurrency stash and where could have the private keys been and who could have gotten them. And that nest egg has still never been found. And I couldn't tell you how large it is.

Starting point is 00:56:03 what's inside it or where it is. Never been seen again. Okay. Yeah. And one other piece I didn't quite know what to do with was how apparently Jennifer and Gerald Conn's family of origin are no longer on speaking terms. What was your read on that? It's difficult to read.

Starting point is 00:56:28 I mean, you know, at the time that they stopped speaking to. together as far as I knew, Jen at that point stood to inherit millions of dollars from this well. And his parents stood to get nothing from the well. So that could have been a reason for conflict between the two of them. I don't know. I haven't been able to speak to them. I mean, Jerry's parents haven't said anything since he died. So we have very, very little insight there. But I would say in a larger sense that even if you believe that Jerry really did die of natural causes, when you look at who was left behind, they had sort of competing objectives, right? You have Alex Hayden, who was Jerry's lead programmer. That's the most crypto-knowledgeable person, the person who had the best chance to know what was really going on at Quadriga.

Starting point is 00:57:27 and then you've got his widow, Jan, who initially stood to inherit a lot of money and then had all of that money seized. And you have the creditors, you have his parents. And each one of these people has slightly different objectives and a slightly different view of what should happen. And so I kind of take everything that all of them say with a grain of salt in terms of what were people's agenda and more specifically, how much did they really know about what Jerry had been up to? You know, it's very easy to look negatively at his wife and say, well,

Starting point is 00:58:06 she didn't tell people for a month he was dead. That's shady. That's sketchy. But we ought to look and say, well, who gave her that advice? And what did she know at the time? There's the possibility that she knew almost nothing about what Jerry was up to. She just thought she was married to, a successful crypto dude who was rich and was going to take care of her no matter what. So in a lot of these things, I feel like you kind of have to take them at face value and say, well, we really don't know. It's a really big difference whether you read this as her true, you know, belief, which is that she didn't know anything or you think she's hiding something. And we tried to consider it, you know, in both ways.

Starting point is 00:58:51 First update us kind of on her financial situation because what Jerry put in as well is not exactly what happened. But then also, yeah, tell us a little bit about the different theories about whether she was in on it or what and any other theories you have about her. So after the fifth monitor's report came out from Ernst & Young, they pretty clearly showed that all of the stuff that Jen had inherited from Jerry had been purchased directly with embezzled funds. So Jerry was taking this customer crypto and sending it to OTC brokers who were cashing him out, transferring the money that he was directly using to buy houses, buy a plane, by a boat. That's all the stuff Jen inherited. So she voluntarily actually entered into a settlement with Quadriga's creditors in which she gave everything back. She was allowed to keep, I believe, $90,000 in her checking account for 2015 Jeep Cherokee and her

Starting point is 00:59:51 wedding ring and everything else went back to Quadriga's creditors. And actually, those houses have mostly, I think, been sold now. Jerry and Jen's house was like on a Canadian real estate website. If you ever wanted to take a virtual real estate tour of it, I think it's still up there. So, you know, she lost everything, you know. She was very, very briefly rich and then went back to having, you know, the same life she had before she met Jerry, I guess, you could say. And as far as we know, she's living in Halifax. She's back on social media. I believe she's started to date again.

Starting point is 01:00:38 And it seems like she's moving on with her life, you know. It doesn't seem like she's still kind of in this realm. and what you read from that, I think, you know, kind of depends on what you think happened. But I do think, I think it's very possible that she is telling the truth and that she really didn't know what her husband was up to and did get hit with a shocking secret that she dealt with as best she could, which was that her husband was an epic fraud. one of one of the biggest frauds there was out there. And I do think it's somewhat credible that she could have not known that, you know, particularly with something like crypto.

Starting point is 01:01:27 I think it's very easy to be like, yeah, I don't know what he's doing. We're rich. Like, it's not asked too many questions. And the ironic part in all of that is that Jerry could have been rich without stealing from people.

Starting point is 01:01:39 He was into Bitcoin in 2014. He was an Ethereum pre-sale buyer. And he ran an. exchange. Any one of those things is plenty to make you rich. With Jerry, I came to believe that we were really dealing with someone who was addicted to scamming, addicted to ripping people off, that it was not really just about the money. Because by my count, he had a lot of money already when he was stealing from people. Maybe it's a form of gambling addiction. It depends what you want to call it. But it definitely seemed to me like this stuff that he was engaged in went beyond

Starting point is 01:02:22 simply trying to get money and into the realm of sort of scamming for sport. And it was an escalating thing too, you know, where he went from doing these very like low level internet high yield investment schemes to he gets involved in Bitcoin. And all of a sudden, the stakes go up a thousandfold. You're not stealing 100,000 bucks. You're stealing a couple hundred million bucks. And I think it looks like he got in over his head, you know. Wow. Yeah, I think one of the probably most memorable moments is at the end, Jennifer connects with Michael Patron. And why don't you tell that story?

Starting point is 01:03:09 But that for me was just like, wow. I feel like this is one story. Maybe I'll hold this story. Oh, you wanted to be a spoiler. Okay. I feel like it's better. Well,

Starting point is 01:03:23 I feel like it's better if you kind of get it in context of what was happening when. Like most of the story takes place in like the one month after he dies. That story, I think, is best left to the end. But, you know, I will say I'll give a different spoiler, actually, which is Jen's writing a book. She's writing a book. tell all a memoir about her experiences. And that, in addition to the story that you just referenced, are, in my opinion, evidence that maybe she's telling the truth and maybe Jerry really is dead. Because otherwise, you have to believe that she's writing a book about a lie that could potentially, you know, get her in a lot of trouble.

Starting point is 01:04:10 And that feels like pretty hubrisy to me. So when I looked into Jerry, all I found was sketchiness and scams. Looking into Jen and what's happened to her in the last year, I have some trouble believing that she's really keeping this horrible secret that could fall apart at any moment. But again, I leave it to everyone to come to their own conclusions about it. Personally, my conclusion has veered back and forth many times in the two years I've been working on the show. And I still wouldn't say I'm confident at all in my conclusions.

Starting point is 01:04:50 Well, I was going to, that was going to be my last question at you. Like, you know, what do you really think happened? But do you feel you have an answer for that? I feel like I set out to figure out what happened to Jerry and what happened to the money. And I feel satisfied now that I know what happened to the money. And that's an easier thing to know because there's a record on the blockchain of where a lot of the money went. In terms of Gerald Cotton himself, I don't feel like we were able to definitively prove that he's alive in order to do so. I think I would have to find him alive.

Starting point is 01:05:28 I have to find him on a beach somewhere or find definitive evidence that he's out there doing stuff. And to prove that he was dead, at this point, I think that exhumation would have to happen or someone would have to reveal something that law enforcement knows that I don't in order to do it. So in terms of proving either way, I don't think that that proof exists. I think without the power of law enforcement, it'll be difficult to achieve that proof. Well, but if you had to bet your favorite crypto, which way would you, which way would Would you bet? The longer it gets away from what happened and he doesn't show up somewhere and get caught,

Starting point is 01:06:13 I think slowly I inch towards thinking that there's a good chance he's really dead. But short of an exhumation, I am still always, I wake up in the night sometimes thinking about this and I think of a different way that he could have tricked me or, you know, manipulated reality. So I still believe both could be true. I'm always going to believe that on some level, even if what it would have taken to pull this off was totally grandiose, Gerald Cotton does seem sometimes like he is the kind of person who could have done something like that. So I'll hold off on my final judgment until I see proof one direction or the other. All right. Okay. Well, this has been super fun talking with you about your journey. Where can people learn more about you and exit scam? You can find out about, you can just search exit scam in any of the podcast stores or it's at exit scam. Show. You can just follow me on Twitter at Aaron Lamer. I do all kinds of podcast stuff. So if you like podcasts, check me out.

Starting point is 01:07:26 Great. Thank you so much for coming on Unchained. Thanks, Laura. Thanks so much for joining us today. To learn more about Aaron and exit scam, check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Anthony Yoon, Daniel Ness, and Mark Murdoch. Thanks for listening.

Unchained - Is Quadriga's Gerald Cotten Still Alive? The 'Exit Scam' Podcast Aims to Answer - Ep.248

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