British Columbia Seizes $1 Million in Assets Linked to QuadrigaCX Co-Founder

Summary: British Columbia has seized assets worth around $1 million from Michael Patryn, a former co-founder of the QuadrigaCX cryptocurrency exchange, using an unexplained wealth order. The assets include cash, gold bars, luxury watches, and more, which authorities allege were purchased with misappropriated customer funds.

Key Takeaways

British Columbia has seized approximately $1 million in assets related to Michael Patryn, co-founder of QuadrigaCX.
The seized assets include cash, gold bars, and luxury items that authorities suspect were acquired with misappropriated funds.
Patryn chose not to contest this seizure, allowing the court's decision to stand.
QuadrigaCX collapsed in 2019, leading to significant financial repercussions for its customers.
The provincial authorities are reviewing whether any seized assets can be used to compensate the creditors of QuadrigaCX.

Canadian authorities seize $1M in gold and cash linked to QuadrigaCX co-founder

Seizure of Assets in British Columbia

British Columbia's authorities have seized assets valued at about $1 million connected to Michael Patryn, the co-founder of QuadrigaCX. This action was undertaken using the province's unexplained wealth order strategy, according to court documentation.

The Supreme Court of British Columbia approved the forfeiture after Patryn opted not to contest the action. Included in the seizure are 45 gold bars, several high-end watches, and cash that was originally found during an RCMP investigation. The items were discovered in a CIBC safety deposit box in Vancouver in 2021. Among the recovered items were three one-kilogram gold bars and 42 smaller ones, along with luxury watches from brands like Rolex and Chanel, various jewelry pieces, identification documents, and a loaded Ruger 1911 .45-caliber pistol.

Context of the QuadrigaCX Collapse

According to court filings, the civil forfeiture office claimed that the seized assets were purchased with customer funds misappropriated from QuadrigaCX in the years leading up to the exchange's failure. The unexplained wealth order mandated that Patryn prove legitimate sources for his assets. Initially, he challenged the investigation on constitutional grounds but later withdrew his opposition and did not show up when the province requested a judgment.

QuadrigaCX, once the largest cryptocurrency exchange in Canada, collapsed in 2019 following the death of its CEO, Gerald Cotten, in India. Subsequent investigations revealed that customer assets were missing and concluded that the platform had become a Ponzi scheme by 2016, utilizing new deposits to satisfy withdrawal requests while Cotten allegedly misappropriated funds for personal expenses.

Investigators have indicated that Patryn, who has used several aliases, including Omar Dhanani, played a significant role in the exchange’s operations and profited from client funds, as highlighted in court documents.

Legal Proceedings and Next Steps

The court documents noted Patryn’s criminal background, referencing a 2005 conviction in the United States under the name Omar Dhanani for running an online identity-theft and money-laundering service, which led to his deportation to Canada.

Moving forward, the province will review whether any of the assets recovered can be allocated to compensate QuadrigaCX creditors since claimants only received a minor portion of their losses during the bankruptcy process, which wrapped up in May 2023.

According to court records, Patryn’s last known location is in Thailand, but his current whereabouts remain unknown. In 2023, QuadrigaCX has announced intentions to initiate interim fund distributions to creditors, even though only a small amount of the missing funds has been recovered, as indicated by the exchange's bankruptcy administrators.