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- QuadrigaCX assets worth over $1M were seized by BC under an unexplained wealth order.
- The court approved forfeiture after Michael Patryn stopped contesting the legal action.
- Creditors still hope for recovery, though only a fraction of missing funds has been found.
QuadrigaCX assets have become the focus of a major legal victory in British Columbia, where the province seized more than $1 million in cash, gold and luxury items linked to co-founder Michael Patryn under its unexplained wealth order regime.
The forfeiture was granted upon the refusal of Patryn to challenge the move by a judge in the Supreme Court of British Columbia. This ruling enabled the authorities to seize the assets and liquidate them. The authorities termed the decision as a significant step towards combating money laundering in the province.
The items were discovered in a CIBC safety deposit box in Vancouver in 2021. Court filings show that investigators found three one-kilogram gold bars and 42 smaller bars inside the vault.
QuadrigaCX Funds Allegedly Used to Buy Gold and Watches
Police also located Rolex and Chanel watches, rings, jewelry, and several identification documents. A Ruger 1911 .45-caliber pistol with loaded magazines was stored in the same box. The gold alone is valued at more than $800,000 based on current prices.
The Civil Forfeiture Office claimed that the assets were purchased with QuadrigaCX customer funds. Investigators indicate that huge sums of money were embezzled in the years leading up to the collapse of the exchange.
The unexplainable wealth order forced Patryn to demonstrate that the funds were earned through legal means. He first appealed the inquiry on a constitutional basis. His response was later reneged, and he failed to appear when the judgment was sought. The court granted the complete seizure of the items without protest.
QuadrigaCX used to be the largest cryptocurrency exchange in Canada. In 2019, the platform collapsed when its chief executive, Gerald Cotten, died unexpectedly in India. After a short time, it was apparent that over $169 million in customer assets had vanished.
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The regulators later determined that the exchange had been running a Ponzi scheme since 2016. Client withdrawals were covered by deposits, and Cotten supposedly used the money to finance personal expenditure, travel, and luxuries.
Creditors Received Only 13 Cents on the Dollar
Investigators have been connecting Patryn to the exchange’s operations. He has worked under different names, such as Omar Dhanani. In 2005, he was found guilty in the United States under that name of running an online identity-theft and money-laundering service. He was taken to prison and sent back to Canada.
The province will now consider whether the possibility to direct any of the seized assets to QuadrigaCX creditors exists. The bankruptcy was settled in May 2023, and the claimants obtained royalties at a rate of just 13 cents per dollar.
There are still many victims who are hoping to recover more. The recent location of Patryn is not known, though the court records show his last place of residence as Thailand. In 2023, QuadrigaCX said it would begin an “interim distribution” of funds to creditors, even though only a small portion of the missing assets had been recovered.
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