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The Next Mt Gox? MIT Tech Review Compares QuadrigaCX to Major Crypto Exchange Disaster

As proceedings related to the QuadrigaCX scandal continue to develop, an MIT Technology Review report has likened the catastrophe to that of the Mt Gox collapse of 2014.

At the time, Mt Gox was the largest cryptocurrency exchange in the world, processing almost three-quarters of all Bitcoin transactions. Based in Japan, it was run by French developer Mark Karpeles who had purchased it from Jed McCaleb who went on to develop the Stellar (XLM) cryptocurrency.

In February of 2014, Mt Gox suspended all trading on its platform, eventually revealing that 744,408 Bitcoin had been stolen and the exchange was insolvent.

Mt Gox 2.0?

Now, with the Canada-based cryptocurrency exchange QuadrigaCX having lost $140 million worth of customer funds, parallels are being drawn. The suspicious death of CEO Gerald Cotton in late January and revelations that he was the only person with access to user funds kicked off a story that has grown consistently more bizarre over time.

Following a suspension in trading, a Canadian Supreme Court assigned lawyers from the accounting firm Ernst and Young to investigate the missing funds. Not only were the lawyers unable to recover any assets, but they also asserted that the wallets that were meant to be holding the funds were empty.

Last week we reported on the difficulties experienced by the Ernst and Young lawyers and their inability to provide banks with the information needed to source the missing funds.

With more than $100 million worth of client assets missing and legal bodies unsure of how to approach the situation, it is certainly beginning to look like Mt Gox 2.0.

Recent Developments

Following an offer of a $100,000 reward from cryptocurrency exchange Kraken for information regarding the missing funds, a researcher from Zerononcense Blog claims to have potentially located some of the missing Ethereum (ETH) at various exchanges, including Bitfinix, Poloniex and, oddly, Kraken.

In more recent developments, a Canadian court has granted QuadrigaCX a 45-day extension to an order to recover the missing funds.

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