Following the death of the founder of Canadian digital currency platform QuadrigaCx, investigators at Canada’s biggest securities regulator dug into the mysterious case that had stranded more than $180 million of investor funds.
What they found was an old-fashioned fraud wrapped in a new technology, according to a 33-page report made public Thursday.
The Ontario Securities Commission, which investigated alongside an RCMP probe, concluded that Gerald Cotten, who died during a trip to India in 2018, carried out the fraud by himself.
“Staff determined that Quadriga collapsed due to a fraud committed by Cotten,” the OSC said, adding that he had opened accounts under aliases and credited himself with fictitious currency and crypto-asset balances, which he then traded with unsuspecting Quadriga clients.
When he died, the 30-year-old founder of the cryptocurrency platform – from Fall River, Nova Scotia – was also the only one with access to the keys, or passwords, to the digital wallets of more than 100,000 investors. Those wallets were supposed to hold their crypto assets, and the investors have been pressing since Cotten’s death to find a way to access their investments.
But what the OSC revealed Thursday is that their money was largely gone two years before Cotten died — lost to unsuccessful trades in cryptocurrencies including Bitcoin and Ether or taken by Cotten to fund a “lavish” lifestyle.
By 2016, Quadriga had morphed into what was more or less a Ponzi scheme, the regulator says, with new investor funds being used to pay out old investors who made withdrawal requests.
“Cotten sustained real losses when the price of crypto assets changed, thereby creating a shortfall in assets available to satisfy client withdrawals,” the OSC explained, adding that he “covered this shortfall with other clients’ deposits – in effect, operating a Ponzi scheme.”
Most client losses fraud-related
The OSC calculated that the bulk of the $169 million in client losses – approximately $115 million – arose from Cotten’s fraudulent trading.
An additional $28 million was lost to trading on other platforms.
“Staff also determined that Cotten misappropriated millions in client assets to fund his lavish lifestyle,” the regulator said Thursday.
Following Cotten’s death, the Quadriga case grew sordid, with investors questioning whether he was really dead and seeking last year to have his body exhumed.
His widow, Jennifer Robinson, said in legal filings that she had received threats.
Quadriga filed for protection from creditors in February of 2019, and entered bankruptcy proceedings a couple of months later. Ernst & Young is the trustee in bankruptcy.
The OSC report said Quadriga was “already in crisis before Cotten’s death, and most likely would have collapsed even if Cotten had lived.”
When he died in December of 2018, the crypto platform owed about $215 million to clients but had almost no assets to cover these liabilities.
“By November 2016, Cotten had injected so many fake assets into the platform that its eventual insolvency was all but assured,” the regulator concluded.
Ernst & Young, the bankruptcy trustee, was able to recover $46 million in assets to pay out to clients, according to the report.
With Cotten dead and the company in bankruptcy, the OSC determined it was not “in the public interest” to bring an enforcement action in the case. But the regulator still wanted to tell investors and the public what happened.
“In this case, our mandate is best fulfilled by sharing enforcement staff’s findings publicly,” the regulator said.
“While public release of a report of this nature is rarely done, we believe that making this review of the facts widely available may help prevent this type of situation from recurring.”
Copyright Postmedia Network Inc., 2020
Goldman Sachs moves to full ownership of China securities JV
Goldman Sachs said on Sunday it received approval from China’s securities regulator to take full control of its mainland securities business.
The U.S. bank said it would buy the remainder of Goldman Sachs Gao Hua Securities Company Ltd (GSGH), and rename it as Goldman Sachs (China) Securities Company Ltd.
The migration of its onshore business units to GSGH from Beijing Gao Hua Securities was underway, it added.
“This marks the start of a new chapter for our China business following a successful 17-year joint venture,” Goldman Sachs said in a statement.
It becomes the second Wall Street firm to be granted approval to shift to full ownership of its securities business after JPMorgan Chase & Co moved to 100% in August https://www.reuters.com/business/finance/jpmorgan-gets-beijings-approval-first-fully-foreign-owned-brokerage-2021-08-06.
Securities businesses in China typically house investment banking, research, equities and fixed income businesses.
Unlike most of the other China JVs, Goldman had day-to-day operational control of its business even with its minority ownership.
Lucrative underwriting fees on equity and bond transactions – especially initial public offerings (IPOs) – in China’s expanding capital markets has been the driving force for Western banks to increase stakes in their mainland business.
Full ownership could allow foreign banks to expand their operations in the multi-trillion-dollar Chinese financial sector, and better integrate them with their global businesses.
Morgan Stanley currently owns 90% of its securities joint venture with partner Shanghai Chinafortune Co Ltd after increasing its stake https://www.reuters.com/business/finance/morgan-stanley-nears-full-ownership-china-ventures-with-stake-buys-2021-05-28 in May.
China’s regulators had examined Goldman Sach’s application to move to full ownership https://www.reuters.com/business/finance/goldman-sachs-signs-pact-wholly-own-china-joint-venture-2020-12-11 since the bank flagged its intention to buy out its partner in December.
(Reporting by Scott Murdoch in Hong Kong and Nikhil Kurian Nainan in Bengaluru; editing by Uttaresh.V and Stephen Coates)
From Canada? Want to go to the U.S.A.? Better have the right vaccine – Boing Boing
The last couple of years have been hard on Canadian Snowbirds. Many of us, myself included, are used to heading south in the fall, to escape the icy bullshit of a Canadian winter. Unfortunately, thanks to COVID-19, a lot of us have been trapped, north of the wall, since March 2020.
I’ve been fine with this.
When the land border was closed down to everyone but essential travellers, my mindset was that if I was going to get sick, I’d just as soon do it in my own nation where healthcare is free (yeah, we pay our taxes, but still.) Then, last winter, the vaccines started to roll out. By early spring, both my wife and I had been injected with two doses of Pfizer’s version of the brew. We breathed a sigh of relief and began to hope that we might, one day soon, be able to start our travels again. I’m sure that lots of other folks did too. Unfortunately, depending on where in Canada they live, it wasn’t a sure bet that they’d wind up with two doses of the same vaccine. In the rush to get as many Canadians vaccinated against the plague as possible, many provinces started mixing and matching whichever vaccines that they had on hand.
So, you could wind up with Pfizer for your first jab and Moderna for your second. It’s cool, they told us. Mixing vaccines affords tons of protection, we were assured. Why, we’d all be able to get back to our lives in no time… provided said life doesn’t include travelling to one of many countries where vaccine mixing is considered to be a dangerous load of bullshit. You may have guessed by now, that America is one of those countries.
From The CBC:
…at the same time the U.S. reopens the land border, it will start requiring that foreign land and air travellers entering the country be fully vaccinated.
The U.S. Centers for Disease Control (CDC) currently doesn’t recognize mixed COVID-19 vaccines — such as one dose of AstraZeneca, and one dose of Pfizer or Moderna — and hasn’t yet said if travellers with two different doses will be blocked from entry when the vaccine requirement kicks in.
So that sucks.
According to the CBC, the Centers for Disease Control and Prevention might soon consider changing their stance on mixed vaccines. I’d like to think that a crap load of data on the effectiveness of mixed vaccine dosing will play into such a decision. No matter how badly folks might want to head south for the winter, Americans deserve to be as safe as they can be.
In the meantime, I suspect that, just like last fall, many snowbirds will wind up on Vancouver Island, where I hang my hat, these days. It’s warm enough here that living in an RV is both possible and comfortable.
But I’ll tell ya, it’s a far cry from kicking back in the trade winds on the cusp of Texas’ southern border.
Travel industry, health experts applaud U.S. decision to allow travellers with mixed doses – CTV News
The organization representing Canada’s tourism industry is applauding the U.S. government’s decision to allow Canadian travellers with mixed vaccine doses once the border opens in November.
On Friday, the U.S. Centers for Disease Control and Prevention confirmed that travellers with “any combination” of two doses of vaccines approved by the World Health Organization or the U.S. Food and Drug Administration “are considered fully vaccinated.”
Beth Potter, who is president and CEO of the Tourism Industry Association of Canada, says the announcement is “really good news.”
“What it does is it provides a little bit more clarity, and this is something that we’ve talked about a lot. We know now that if you’ve got that mixed dose, as of November you’re going to be able to enter into the United States,” she told CTV News Channel on Saturday.
Infectious disease expert Isaac Bogoch of the University Health Network in Toronto says allowing mixed dosed travellers is “a smart and data driven approach.”
“This will be a huge relief to many Canadians who did the right thing and got vaccinated and even took those mixed and matched vaccine approaches. It’s safe, it’s effective, and now there’s a recognition of this,” Bogoch said in an interview with CTV News Channel on Saturday.
“I’m really happy to hear this. It’s about time.”
This announcement came after the White House confirmed that the U.S. land borders with Canada and Mexico would be open to fully vaccinated tourists by Nov. 8.
On the American side, the U.S. Travel Association also applauded the Biden Administration’s plans to reopen the border.
“Reopening to international visitors will provide a jolt to the economy and accelerate the return of travel-related jobs that were lost due to travel restrictions,” said association president and CEO Roger Dow in a statement on Friday.
“We applaud the administration for recognizing the value of international travel to our economy and our country, and for working to safely reopen our borders and reconnect America to the world.”
But while the U.S. won’t require Canadians to show proof of vaccination to cross, returning to Canada requires a negative PCR test conducted at most 72 hours before crossing the border.
PCR tests can cost upwards of $200. The Canadian government does not accept rapid antigen tests, which can be had for only $40.
Brian Higgins, a New York congressman whose district includes the border cities of Buffalo and Niagara Falls, wants to see Canada drop the COVID-19 PCR test requirement.
“I think that the U.S. decision to allow Canadians coming into the United States without a test again underscores the potency of the vaccine,” Higgins told The Canadian Press on Friday. “I would like to see that reciprocated by our Canadian neighbours.”
However, Public Safety Minister Bill Blair said that Canada will continue to require PCR tests so long as the Public Health Agency of Canada advocates for it.
“We’ve seen throughout the pandemic that advice has evolved as new evidence and new data is available. We’ll continue to follow the advice in the Public Health Agency Canada,” he said in an interview with CTV’s Question Period on Sunday.
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