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In a series of tweets, the Coinbase CEO, Brian Armstrong, shared a summary of what they at Coinbase believe happened to the now failed Canadian cryptocurrency platform QuadrigaCX.
Armstrong kicks of by saying that they did their own internal research, including some blockchain analytics, to see if they could help in any way.
However, he is quick to point out that they are at best making guesses. 'Take it as *pure speculation*, nothing more', he said.
Wanted to share a summary of what we believe happened to QuadrigaCX. We did our own internal research, including some blockchain analytics, to see if we could help. Important to note that this is just our best guess. Take it as *pure speculation*, nothing more.
— Brian Armstrong (@brian_armstrong) February 21, 2019
The Coinbase CEO comes to the conclusion that the QuadrigaCX debacle, most likely, won't be an exit scam.
'QCX was one of the oldest exchanges in existence (founded in 2013). If they planned an exit scam, it likely would have been timed better.'
Read more: Canadian crypto exchange QuadrigaCX goes offline, Reddit screams 'Exit Scam'
According to Armstrong QuadrigaCX suffered a multimillion dollar bug in June 2017, which is around the same time as when there is movement of funds into the cold storage and could suggest that the Canadian exchange tried keeping afloat, and maybe attempted to trade their way out of a hole.
4. Patterns of sends from cold storage suggest they tried keeping exchange afloat, and maybe attempted to trade their way out of a hole; (again just a guess here)
— Brian Armstrong (@brian_armstrong) February 21, 2019
We can assume that liquidity dried up and the bear market of 2018 caught up with them, Armstrong says, further pointing to the assumption that there was a sequence of events that suggests a mismanagement with a later attempt to cover it up.
Armstrong seems to believe that there were at least a few 'insiders' who knew that QuadrigaCX was spiraling down and thinks that it is entirely possible that the untimely death of QuadrigaCX CEO, Gerald Cotton, was used as an outlet to let the company sink.
This implies that at least few people inside Qadriga knew that they were running fractional. If so, then it's possible that untimely death of their CEO was used as an outlet to let the company sink.
— Brian Armstrong (@brian_armstrong) February 21, 2019
Read more: The QuadrigaCX timeline: as it happened
Although Armstrong comes up with a story that seems very plausible, he says that these are their best guesses, based on the available data.
'As the case unfolds we might find out we were incorrect.'
While this story isn't perfect, it does seem plausible. I do want to emphasize that these are our best guesses based on the available data. As the case unfolds we might find out we were incorrect.
— Brian Armstrong (@brian_armstrong) February 21, 2019
The Twitter community in large parts seem to agree with Armstrong's guesses.
All sound plausible and very likely all things considered. Although it's anyone's guess as to what really happened
— Crypto Jolie (@CryptoJolie) February 21, 2019
Seems pretty clear to me this is exactly what’s happened!!
— Kevin McGeever (@kmcgeever) February 21, 2019
Uh....are you just completely ignoring their CEO's past as an "identity thief", and connections to other identity thieves? Makes the speculation much more wild considering they had access to AML/KYC information to some 115,000 Canadians.
— Frank Dashwood (@DJ_Erock23) February 21, 2019
Their banking problems started in spring of '17, I was in contact with the team about it during that time.
— Nick Cote (@mBTCPizpie) February 21, 2019
Duane has since deleted all his SM accounts, and I agree, more than just the owner knew what was going on over there.
I tried to raise the alarm, nobody cared. 🤦♂️😐 pic.twitter.com/dvVdbZ9Ca4
Well thought. I think there are still too many unknowns and the money trail -> to spouse and others needs a deep dive which Im sure EY will take care of.
— Brett Russell 🌐 (@brettarussell) February 21, 2019