Reports show that this year’s World Cup will be watched by approximately 4 billion people with the gambling community taking full advantage of this worldwide phenomenon. The tournament is slated to fetch over $36 billion in the gambling market with most of the funds being transferred using cryptocurrency.
The World Cup final that is happening on 15th July is expected to contribute a massive chunk of this gambling fund. Some of the recent sources reveal that most of the cryptocurrency gambling platforms are based on Ethereum [ETH] and Binance Coin [BNB].
Using cryptocurrency in the betting industry has been a major thorn in the side of the authorities with countries like China taking strict action against it. This was made evident by the country’s police force shutting down a cryptocurrency gambling ring conducting illegal bets on the ongoing World cup results.
On 13th July, the ‘Chengguan’, another term for China’s police force, released a statement which stated that they had arrested six major suspects in the gambling ring. The police proceeded to freeze assets worth five million yuan found in their accounts and cryptocurrencies worth 10 million yuan. The main tokens that the convicts traded in were Bitcoin [BTC], Ethereum [ETH] and Litecoin [LTC] because of their decentralized nature. Chinese local news outlet, Xinhua stated that the sting operation led to some startling developments:
“The network took off more than 20 involved gangs, arrested more than 540 suspects, smashed more than 70 gambling apps and websites, shut down more than 250 online social platform chat groups, and frozen more than 260 million yuan of funds involved in the seizure. A group of servers, computers, mobile phones, bank cards and other items involved.”
The police also reported that the ring was successful till now because they ran their businesses on the infamous ‘dark web’, the part of the internet with no rules and unindexed search engines. During their run, the gambling site had almost 350,000 users with the founders running a sort-of pyramid scheme to bring in more users. Over 8000 ‘special agents’ were given incentives depending on the number of users they bought to the website.
The police commented on the bust saying:
“The gambling syndicate used the loophole that virtual currency is not effectively regulated in our country to make huge profits”
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QuadrigaCX Curtain Call Part 3: Private Jets, yachts, a major bombshell and maybe a biopic?
Ernst and Young, the audit giant, the court-appointed third-party monitor and now the bankruptcy trustee of the QuadrigaCX proceedings, released its fifth report on the QuadrigaCX episode. Part 1 & 2 of AMBCrypto’s coverage can be found here, and here.
Gerald Cotten did what any fraudster would do; swipe all the money from his business, use it to enrich himself and his family and fail to pay anyone affected. The monitor was unable to ascertain any “records in respect to fees or compensation” paid to anyone by the exchange. Further, Cotten did not file tax returns in 2014, 2015 and 2017. However, in his statements from 2016, no income from QuadrigaCX was claimed.
The report identified several fiat transfers between Cotten and his wife, Jennifer Robertson, and the duo acquired significant “real and personal property” either personally, or via third-party corporations. Cotten and Robertson also frequented various vacation destinations using private jet services. No other income apart from the funds emanating from QuadrigaCX was used for these lavish adventures, the report said,
“The Monitor has been advised that neither Mr. Cotten nor his wife had any material source of income other than funds received from Quadriga.”
An Asset Preservation Order placed on Robertson and her property by the monitor in April listed out the assets as real properties in Nova Scotia and British Colombia, securities, cash holdings, a “personal sailing vessel,” a “personal aircraft, “several luxury vehicles,” and gold and silver coins with a total value of $12 million.
Evan Thomas, a commercial litigator who delved deep into the QuadrigaCX case, stated that the ability of the exchange and its CEO to carry out such fraudulent acts right under the noses of the authorities and its customers stemmed from its lax internal governance. Cotten made sure that the administrative activities would not be logged. The litigator stated,
“Quadriga apparently had no internal controls or accounting records, no segregation of customer assets from Quadriga’s assets, and no visibility into its own profitability, ever.”
On the topic of the funds’ movement between QuadrigaCX and the aforementioned unnamed exchanges, Thomas stated that Cotten may have used fake accounts under pseudonyms to avoid suspicion and then credited these accounts with fiat and cryptocurrencies which were then “used to trade against the Quadriga users.”
Thomas stressed the link between the Markay account and the competitor exchanges where Gerald Cotten was known to control accounts under different names. He stated,
“Again, these withdrawals were primarily to other exchanges where Cotten held accounts in his name or to other parties trading with Cotten personally. Some of the transfers were to wallets controlled by unknown parties.”
Succinctly summarizing the entire QuadrigaCX debacle, Thomas concluded,
“The biggest bombshell, foreshadowed in earlier reports, is that Cotten set up fake accounts, funded them with hundreds of millions of dollars of fiat and crypto that didn’t exist, bought real crypto from users and then moved the crypto off Quadriga.”
QuadrigaCX has been a tale like no other, or every other, depending on how deep and detached you are from the world of financial frauds. It has been the ideal scam; man sets up a fake business, takes in millions of dollars worth of funds, scatters the funds in different pools under anonymous names, enriches himself and his family, before the mastermind behind it all dies, leaving the authorities clutching thin air.
Who knows? A QuadrigaCX biopic might be in the works with Ryan Gosling (Another Canadian) in the lead. Martin Scorsese should be licking his lips now.
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