The provincial government could end up seizing $250,000 in cash, 45 gold bars, jewelry and Rolex watches after filing an unexplained wealth order against a company once the subject of a Netflix documentary and the inspiration for a TV crime show.
Public Safety Minister Mike Farnworth said the B.C. Civil Forfeiture Office filed the order against Quadriga CX. The Vancouver-based cryptocurrency exchange went bankrupt in 2019 following the apparent death of its co-founder and CEO Gerald Cotten. He had founded the company in 2013 with Michael Patryn. Court documents show Patryn as the defendant.
The firm, which was once Canada’s largest crypto exchange, owed customers some $200 million in crypto at the time of Cotten’s death.
Farnworth said the application filed with the British Columbia Supreme Court was the third of its kind and a “strong demonstration” of government’s commitment to take “decisive action” in such cases.
Unexplained wealth orders became a tool after changes to the Civil Forfeiture Act last year. These orders compel individuals suspected of crimes to explain how they acquired their wealth and allow for confiscation of property, without proving criminality, by reversing the burden of proof.
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While this order won’t lead to the automatic forfeiture of property, it will allow for sufficient evidence in civil litigation, if that’s pursued. Police cannot access these orders for criminal investigations.
Farnworth said the actions of Quadriga CX led to thousands of people losing their life savings. He pointed out that the Quadriga CX case was also profiled by Law and Order Toronto: Criminal Intent in a February 2024 episode, The Key to the Castle.
“While the fallout of cryptocurrency theft that leaves many victims in its wake is topical, what is even more timely is the recovery of these ill-gotten funds and converting them to community benefits in a public way, ” he said.
The province uses seized assets to fund victim services and crime prevention initiatives.
A 2020 review by the Ontario Securities Commission found that Cotton had committed “old-fashioned fraud” along the lines of a Ponzi scheme.
“Operating without any proper system of oversight or internal controls, Cotten was able to misuse client assets for years, unchecked and undetected, ultimately bringing down the entire platform,” the review reads.
The review also notes that Cotten and/or Quadriga would likely have been the subject of an enforcement action by the commission.
“However, this is not practical given that Cotten is deceased and Quadriga is bankrupt, with its assets subject to a court-supervised distribution process,” it reads.
Patryn was involved with the company from its inception in 2013 until 2016 and the OSC found that the majority of client funds were deposited with Quadriga after Patryn’s departure. According to the OSC, Patryn had been convicted in 2005 in the United States of conspiracy to transfer identification documents in relation to an online money-laundering service under his prior name, Omar Dhanani. He is also known as Michael Dhanani and Omar Patryn.