Bitsane and QuadrigaCX - where did the money from cryptocurrency exchanges go?

The Bitsane stock exchange registered in Ireland has recently disappeared, and with it, the money around 250 thousand. users. We also got to know an interesting report about QuadrigaCX after the death of its owner. It turned out that approx. 160 million USD, paid by customers of the stock exchange, spread to the sumptuous life of its owner and his wife.

Initially, Bitsane's troubles seemed to be technical problems. Already in May 2019, Bitsane limited the possibility of withdrawals. Then they were "temporarily" suspended, about which customers were informed by e-mail. However, it is now known that  the cryptocurrency market has disappeared, and with it the deposits of customers who used it to turn cryptocurrencies.

Not only the stock exchange and its website have disappeared, but also its Twitter and Facebook profiles, which cannot be explained with "technical problems". Just like the deletion of profiles on LinkedIn belonging to Dmitry Prudnikov (acting as the technology director of the exchange) and the president and founder of the exchange, Aidas Rupsys.

A quarter of a million Bitsane customers

Bitsane cryptocurrency market had approx. 246 thousand registered users, and their daily turnover was 7 million USD. The platform was popular, even though it only existed since the 2016 year. As one of the few offered XRP trading, it also had an official recommendation from Ripple, acting according to her "A great place to buy and sell XRP".

QuadrigaCX - a cryptocurrency exchange or a financial pyramid?

The disappearance of stock exchanges cryptocurrency is always shrouded in a mist of mystery, but it has been somewhat dispelled in the case of QuadrigaCX. This platform did work without major obstacles but until the founder and owner Gerald Cotten died in February of the year 2019. At that time, she had 363 thousand. registered users who traded around 250 million USD.

After the death of the entrepreneur, it turned out that no one except him had passwords or a key to access the funds. The case was therefore examined by a court which appointed the well-known auditing firm Ernst & Young to verify its documents. The report turned out to be shocking.

Ernst & Young: The owner spent most of the money

On the 70 pages of the official document, we can read that the vast majority of the assets of stock exchange customers have long been carelessly spent by the entrepreneur. What's more, he did not even keep accounting books, and from the 2016 year he did not make any financial statements. There were also no records of transactions carried out, and the collateral in the event of a loss of funds was indeed at a trivial level. The main access keys have never changed.

It was not worth investing in security, because there was just nothing to look after. Money QuadrigaCX customers were efficiently moved to other cryptocurrency exchanges. The owner, however, did not bother with cover-ups or transfers. Part of the funds went directly to his account or to accounts of companies belonging to him.

Renting aircraft and traveling

Gerald Cotten thanks to this could live extremely well and enjoy the highest level of entertainment. What did he spend money on? He showered his wife with presents, rented private planes, which he flew on a luxury holiday, did not avoid extravagant tips or sports cars. He could rent an entire island and spend time with friends who were less than serving people.

The Ernst & Young report states that since 2016 it is practically difficult to say that the QuadrigaCX exchange can be treated as a business venture. According to E&Y auditors, this is simply a fraud and a large scale one.

The current obligations of the company towards customers amount to approximately 160 million USD. For now, 24,5 has been recovered USD million, and nobody is very hopeful that further exploration will allow to find even a part of the funds.