Quadriga Founder’s Finances Add to Mystery of Missing Millions

(Bloomberg) -- QuadrigaCX founder Gerald Cotten and his wife Jennifer Robertson had a “significant” fortune that included real estate, vehicles, a sailboat and an airplane. Yet, the duo apparently earned less than the typical Canadian couple.

Court filings say the pair “incurred significant personal, living and travel-related expenses” before the unexpected death of Cotten last December threw his digital exchange company Quadriga Fintech Solutions Corp. into disarray. Quadriga shut down in January, leaving some 115,000 customers out of pocket for about C$260 million ($195 million) in cryptocurrencies and cash. His widow has been dealing with the firm’s fallout ever since through court-approved creditor protection and subsequent bankruptcy proceedings.

Reports from Ernst & Young, the firm that served as the monitor and bankruptcy trustee, paint a picture of the couple’s financial situation. Among the findings:

• Cotten and Robertson didn’t appear to have any material sources of income other than funds they received from Quadriga. The only document found on Cotten’s compensation was an employment agreement from 2015 indicating an annual salary of C$65,000 for the founder.
• Cotten didn’t file personal tax returns for 2014, 2015 or 2017 and his 2016 return didn’t report any income from Quadriga.
• Robertson’s tax returns from 2015 and 2016 showed she reported total income of less than C$60,000 a year, and in 2017 she reported total income of less than C$5,000 -- none from Quadriga.
• Investigations show Cotten periodically transferred significant cryptocurrency and other funds outside of Quadriga. “In certain instances, these transfers were for significant amounts of fiat currency directed to Mr. Cotten personally and used to fund personal expenses and the purchase of personal assets. In other instances, transfers were made directly to Ms. Robertson and used to pay personal expenses and purchase personal assets in her name or the name of companies which Ms. Robertson controlled.”
• Robertson, who married Cotten in June 2018, agreed yesterday to return about C$12 million of assets to Quadriga as part of a voluntary settlement, which still requires court approval. She’ll get to keep about C$90,000 in cash, a C$20,000 retirement savings plan, a 2015 Jeep Cherokee, her wedding band, some personal furnishings and Quadriga shares.

Read more: Crypto Exchange Founder Filed Will 12 Days Before he Died

• “The value of the excluded assets being retained by Ms. Robertson is relatively minimal and includes a number of items that the trustee expected to generate minimal value in a liquidation,” the trustee said in an Oct. 7 filing in an Ontario court.
• Robertson’s stepfather Tom Beazley -- who stepped in as a Quadriga director after Cotten’s death -- also agreed to transfer assets to the Quadriga estate, including a 2017 Toyota Tacoma truck.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, ;David Scanlan at dscanlan@bloomberg.net, Dave Liedtka, Randall Jensen

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