Lead Securities Regulator

Ontario Securities Commission (OSC)

Inter-Jurisdiction Collaboration

The OSC thanks the following regulatory bodies for their assistance with the investigation of this matter: The British Columbia Securities Commission, the Autorité des marchés financiers (Québec), the Nova Scotia Securities Commission, the New Brunswick Financial and Consumer Services Commission, the U.S. Commodity Futures Trading Commission, the U.K. Financial Conduct Authority, the Swiss Financial Market Supervisory Authority, the Monetary Authority of Singapore and the British Virgin Islands Financial Services Commission.

Type of Misconduct Committed


Case Description

Over a 10-month period, a multi-disciplinary team under the direction of OSC Enforcement Staff investigated Quadriga by analyzing trading and blockchain data, interviewing key witnesses, and collaborating with numerous regulatory bodies in Canada and abroad. As Quadriga did not maintain proper financial records, Staff analyzed records from third-party payment processors and banks to reconstruct the platform’s affairs. To determine how Quadriga’s co-founder and CEO Gerald Cotten (Cotten) managed client assets, Staff analyzed platform data relating to more than 368,000 client accounts and over six million individual transactions, as well as thousands of Quadriga-related emails. Staff also obtained and analyzed records from other crypto asset trading platforms.

Staff determined that Quadriga collapsed due to a fraud committed by Cotten. Cotten opened accounts under aliases and credited himself with fictitious currency and crypto asset balances, which he traded with unsuspecting Quadriga clients. Cotten sustained real losses when the price of crypto assets changed, thereby creating a shortfall in assets available to satisfy client withdrawals. Cotten covered this shortfall with other clients’ deposits – in effect, operating a Ponzi scheme. Staff calculated that the bulk of the $169 million in client losses – approximately $115 million – arose from Cotten’s fraudulent trading. Staff also determined that Cotten misappropriated millions in client assets to fund his lavish lifestyle.


Given the magnitude of Quadriga’s downfall, the harm done to Ontarians, and the novel issues surrounding crypto asset trading platforms, the OSC announced in February 2019 that it would review this matter. OSC Staff would likely have pursued an enforcement action against Cotten and Quadriga. However, this is not practical given that Cotten is deceased and Quadriga is bankrupt, with its assets subject to a court-supervised distribution process.

Key Takeaways for Investors

Here are key takeaways that investors can learn from the Quadriga case:

Be wary of crypto asset trading platforms

In Canada, many crypto asset trading platforms are not registered with securities regulators and have taken the position that they are not required to register. Important safeguards typically in place at firms regulated by securities regulators may not be in place.

Be aware that platforms may maintain custody and control of your assets

This means you depend on the platform to deliver your assets to you when you request them. There is also no guarantee that the platform will have enough cash on hand to manage your withdrawal requests.

Platforms may not disclose important information

Such as whether they maintain custody and control of your assets, and how they store and handle your assets. You may not be aware that a platform’s practices are exposing your assets to risks of loss, theft or misuse.

Before entrusting your assets to a crypto asset trading platform, do your research and watch for signs of potential fraud

Take steps to learn about the platform’s operations and approach to risk management. If the platform does not disclose this important information, consider this a red flag.

Additional Information

Read more about the Quadriga case: