QuadrigaCX Fraud: What Happened and How It Changed Crypto Forever

When QuadrigaCX, Canada’s largest cryptocurrency exchange that collapsed in 2019 after its founder died with no access to cold wallets. Also known as Quadriga, it once handled over $200 million in customer funds. vanished overnight, it wasn’t just a company failure—it was a wake-up call for the entire crypto world. No one saw it coming. Not the users, not the regulators, not even the auditors. Gerry Cotten, the founder, died in India in December 2018. But instead of handing over control, he took the private keys with him. No one else had access. By February 2019, users couldn’t withdraw a single dollar. The exchange went dark. And with it, $190 million in Bitcoin, Ethereum, and other coins disappeared into thin air.

This wasn’t a hack. This wasn’t a technical glitch. This was crypto exchange fraud, a deliberate act of mismanagement and deception where user funds were treated like personal money. Also known as custodial theft, it revealed how little oversight existed in the crypto space. QuadrigaCX never had proper accounting. It never had real cold storage. It never had a second person with access. The company’s entire security model was built on one man’s word—and when he died, the whole system collapsed. Even worse, investigations later found that Cotten had been using customer funds to cover personal expenses, including luxury cars and real estate. The Canadian government stepped in, but recovering the money became a nightmare. Only a fraction of the lost funds were ever recovered, and thousands of users were left with nothing.

The fallout changed everything. After QuadrigaCX, exchanges started publishing proof-of-reserves. Regulators in Canada and beyond began demanding audits. Investors stopped trusting platforms without clear custody structures. The term crypto exchange scam, a platform that takes deposits but never intends to return them. Also known as rug pull exchange, it became a common warning in crypto communities. was no longer just a rumor—it was a real, documented risk. Today, every time you see a new exchange promising low fees and fast withdrawals, you should ask: Who holds the keys? Is there a third-party audit? Are there multiple people with access? The QuadrigaCX fraud didn’t just steal money. It stole trust. And rebuilding that trust is still a work in progress.

Below, you’ll find real stories, investigations, and lessons from other cases that mirror what happened with QuadrigaCX. From fake exchanges pretending to be legit to platforms that vanished without a trace—these aren’t hypotheticals. They’re the consequences of ignoring basic safety rules. If you’re trading crypto today, you need to know what happened. Not just to avoid getting burned—but to make sure you never become another footnote in a fraud story.