Man lost $500,000 in life savings in crypto exchange ‘scam’ after trader ‘died with password to access funds’ | Scientific and technical news

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Tong Zou tries to avoid thinking about how much money he lost.

The 33-year-old saw all of his savings wiped out when a cryptocurrency exchange went wrong for him.

“It makes me even more depressed about it,” he told Sky News.

“I could have invested it in real estate. I could have put it in stocks.

“So far, nothing has been found. It sucks.”

Mr. Zou had entrusted his money to Canada’s largest cryptocurrency exchange, Quadriga CX, whose co-founder then died apparently with his clients funds password.

The mysterious death of Gerald Cotten at the age of 30 has left tens of thousands of investors at a loss and led to speculation he may still be alive.

Picture:
Gerald Cotten’s death was announced in January 2019. Pic: Netflix

It later emerged that Mr Cotten had operated a Ponzi scheme before his death, with investigators calling it ‘an old fashioned fraud wrapped in modern technology’.

The case is now being explored in a new Netflix documentary in which Mr Zou appears, having lost around C$500,000 (£306,000) – including $200,000 that his parents gave him.

“A lot of people want to blame me for that,” he says.

“Yeah, I deserve some of the blame because it’s irresponsible. I should have done more research.

“It’s also bad luck, timing. How would I know?”

“I guess I trusted them a lot”

Mr Zou had racked up large debts in 2018 after taking out $80,000 loans to buy Bitcoin before the value of the cryptocurrency crashed that year.

Tong Zou lost his savings of $560,000
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Tong Zou wanted to transfer money from the United States to Canada using a cryptocurrency exchange

The software engineer decided to sell his San Francisco apartment to pay off his debt and planned to move to Vancouver.

He had to transfer his 400,000 US dollars to his Canadian account, but wanted to avoid bank commission fees.

“I was thinking of other ways to do it where I could save money,” he says.

Mr. Zou insists that he had successfully used other cryptocurrency exchanges in the past and knew friends who had used Quadriga.

“I guess I trusted (Quadriga) a lot,” he added.

“I did some research on Reddit. They said, ‘Oh, it’s going to take time, but you’ll still get your money. It’s not a scam.'”

Mr. Zou bought Bitcoin with his money before selling the cryptocurrency on Quadriga, expecting C$500,000 to be transferred to his Canadian bank account.

But three months later, there was still no sign of the money.

Netflix is ​​streaming a new documentary titled Trust No One: The Hunt For The Crypto King.  Picture: Netflix
Picture:
Netflix is ​​streaming a new documentary titled Trust No One: The Hunt For The Crypto King. Picture: Netflix

“I couldn’t sleep”

After sending Quadriga several emails, he says the company blamed the delay on a legal battle it was having with a bank.

“I kept asking them: Where’s my money? – October, November, December – all this time,” he says.

“They kept saying it was the trial.

“I couldn’t sleep. I just prayed. I really prayed it wasn’t a scam.

“My parents were worried about it too.

“At that time, I couldn’t do anything. There was no way to get my money back.

“Once I put it down, it was pretty much gone.”

He added: “It turned out to be a scam.”

Mr Zou said that although his mother had sympathy for him, he did not tell his father who only learned of the lost money when his son appeared on the news.

Asked about his father’s reaction, Mr. Zou replied, “We try to avoid talking about it.”

The Mystery of Crypto Trader Gerald Cotten

  • The death of Quadriga CX Managing Director Gerald Cotten was announced in January 2019
  • The 30-year-old died “due to complications from Crohn’s disease” while traveling in India the previous month, his wife Jennifer Robertson said.
  • After his death, Quadriga said it could not refund $190m (£110m) to customers because Mr Cotten had died with the password to access the funds.
  • Ms Robertson said her husband was ‘solely responsible for managing the funds and coins’ and no other team members could access the stored funds.
  • She claimed she had her husband’s laptop but did not know the password and a technical expert they hired was unable to bypass its encryption.
  • Auditors, who were brought in to help recover the cryptocurrency, managed to gain access to Mr. Cotten’s laptop, but discovered that the digital wallets inside had been emptied in April 2018 – eight months before his death.
  • A regulator found that, faced with losses when the price of crypto assets changed, Cotten covered the resulting shortfall with deposits from other clients.
  • Ms Robertson reportedly said she was ‘distraught and disappointed’ to learn of the extent of fraud at her husband’s business and insisted she was neither aware nor involved.

When asked if he believed Mr. Cotten was dead, Mr. Zou replied: “That’s my belief, not everyone’s belief.

“I’m 80% sure he’s dead.

“If there had been a time to fake his death, it would be late 2017 when (the value of the cryptocurrency) was really high.

“The timing didn’t make sense to me.”

Mr Cotten’s widow, Jennifer Robertson – who has denied any knowledge of her husband’s wrongdoing – has since said she has received threats from online cryptocurrency communities.

Gerald Cotten and Jennifer Robertson.  Picture: Netflix
Picture:
Gerald Cotten and Jennifer Robertson. Picture: Netflix

Some 76,000 investors collectively lost at least C$169 million following Quadriga’s collapse in 2019, a regulator has found.

About $115 million of that sum was due to Mr. Cotten’s fraudulent dealings, he said.

Mr Zou is now embroiled in a lawsuit seeking to recover money for those who lost funds with Quadriga, but he said there have been no meaningful updates since 2020.

He says he hopes the new Netflix documentary will mean “maybe they can shake their asses and do something about it”.

“I want to share my story so it doesn’t happen to other people,” he adds.

Mr. Zou, who currently lives in a rented apartment in Vancouver, says he is now “pretty much out of crypto.”

“I kinda liked it,” he says.

“I don’t have much – I guess just to say I still have something in there but I don’t pay attention to it.

“I don’t know how big crypto will be in the future, but it will be there.”

Trust No One: The Hunt For The Crypto King is now available to stream on Netflix.

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