For those who don’t remember the events of last year, we are talking about a case that could be made into a movie: in fact, the founder of the exchange was missing for a long time and then declared dead in India, where he had travelled a few months earlier to treat an alleged illness.
Only Cotten held the private keys to the various cold wallets, so it was impossible to move the funds after his death. At that time, users accessing the platform could only see a screenshot of an emergency server maintenance routine.
Then the truth emerged: not only were the clients’ funds not safe, but they were used by the founder for dubious operations.
Indeed, the funds were found to be on other exchanges, leading to the doubt as to whether they had actually been lost or cleverly moved before the staging of the founder’s death.
Continuing the analysis of the movements made by the founder, it was also discovered that he used the funds of other clients to cover the losses: they were used to pay back other users and thus create the impression that the platform had no problems.
The exchange then declared bankruptcy with a loss of over $190 million and legal costs of just under $2 million.
Out of all this, only 25 million dollars have been recovered, which will be used to compensate the over 70 thousand users, victims of a scam set up by an unscrupulous person who might have even faked his own death.
The Ontario Securities Commission (OSC) report concludes that this case will serve as a warning to all those who use cryptocurrencies and various exchange platforms, especially centralized ones, where funds are in the hands of a few people.