On Dec. 19, the Twitter account Zachxbt revealed he discovered five cold wallets from the now-defunct Quadrigacx crypto exchange move 104 bitcoin. The following day, ‘big four’ accountancy firm EY, Quadrigacx’s bankruptcy court trustee, explained it did not authorize the spending of the funds and that prior reports detailed that the cold wallets were inaccessible to EY.
Cold wallets linked to dormant Quadrigax wake up after years of sitting idle
During the first week of February 2019, crypto exchange Quadrigacx told customers that it was ceasing operations until liquidity issues were resolved. Then the Supreme Court of Nova Scotia ordered the business to enter the Companies Creditor Arrangement Act (CCAA), and the court appointed the accountancy firm EY to manage the remaining assets of the firm.
Making matters worse, it was discovered that $150 million in customer funds were lost after the death of Quadrigacx’s founder Gerald Cotten. Reportedly, the private keys Cotten held could not be accessed, and it spurred numerous conspiracy theories that said Cotten may have faked his own death.
Nearly four years later, the Quadrigacx mystery still remains unsolved, and on Monday, December 19, 2022, Twitter user Zachxbt Explained They discovered 104 bitcoin (BTC) moves from five different Quadrigacx-flagged cold wallets. 104 BTC is worth $1.75 million using today’s exchange rates and Zachxbt believes that Around 69 BTC were sent to bitcoin mixing wallet service Wasabi.
In addition to Zachxbt’s discovery, EY addressed the bitcoin movements the following day on Dec. 20, 2022, in a “notice to affected users” that highlights the “unauthorized transfer of Quadriga bitcoin.” EY insists that the transfers were not authorized by the accountancy firm and it noted that the company and representative counsel “have become aware of an unauthorized movement of bitcoin.”
While Zachxbt’s tweet mentions five addresses, the EY update includes a total of six bitcoin wallets (1, 2, 3, 4, 5, 6). Ernst & Young states that on several occasions it has been documented by CCAA proceedings that these specific funds were out of reach. “Quadriga inadvertently moved certain cryptocurrency to cold wallets, which applicants were unable to access,” EY’s update details.
Onchain data shows the bitcoin addresses “1J9Fq” and “1Mhgm” connected following the first transactions before moving to the bitcoin wallet “1GVsp.” Furthermore, while Zachxbt detailed that it appeared “1HyYM & 1JPtxS were sent to Wasabi” five days ago, onchain data shows the two addresses connected, and 33.12 BTC was sent to “bc1q0.”
33.12 BTC or over $500K worth of bitcoins using today’s exchange rate has been inactive in addresses since December 17th. Interestingly, the single transaction of 33.12 BTC sent to BC1Q0 came from 164 different senders. Several matching bitcoin addresses were identified in the onchain activities among 1HyYM, 1JPtxS, and bc1q0.
