FBI Opens Forms for US-Based QuadrigaCX Crypto Exchange Victims
The investigation moves beyond the borders of Canada, as US agencies take a hawkish stance to cryptocurrency activity.
QuadrigaCX, the bankrupt exchange that only offered incomplete answers during the trial in Canada, is now being investigated by the FBI. The agency is gathering testimonies from US citizens who suffered losses on the exchange.
The QuadrigaCX exchange turned into a story of low transparency, and personal enrichment through the funds of traders. In the end, the monitor on the case failed to discover any significant amount of cryptocurrencies in the exchange’s wallets.
The involvement of the FBI means the bankruptcy procedure will not be the only investigation, and that QuadrigaCX is likely to face a criminal procedure. Criminal investigations against exchanges are a whole new chapter, potentially leading government agencies to scrutinize blockchain transactions.
The FBI form aims to look deeper into personal exchange accounts, including the size of loss and other activities such as withdrawals. Submitting a form may mean further questioning by the FBI.
The involvement of the US government agency revived concerns surrounding the QuadrigaCX bankruptcy. The strange circumstances of Gerald Cotten’s death in India in late 2018 raised doubts that the founder may have staged an elaborate exit scam. At the very least, the FBI investigation inherits the multitude of questions regarding the accounting of QuadrigaCX, as well as its behavior while holding crypto assets in custody.
QuadrigaCX may have wiped out between $170 and as much as $190 million in cryptocurrencies, potentially incurring greater losses as the price of BTC rose from January’s lows.
This is not the first time that US regulators have to handle international digital asset exchanges. In the past weeks, the New Zealand exchange Cryptopia initiated a US-based bankruptcy procedure to protect its database information and potentially be able to recover losses for the traders.