When Ameer and Raees Caji disappeared last week along with 69,000 bitcoins belonging to customers of their Africrypt exchange, they were continuing a time-honored crypto tradition. Since Bitcoin first appeared, there have been dozens and perhaps hundreds of “exit scams,” in which the heads of exchanges or token projects suddenly disappeared with user or investor funds.

One of the most notorious apparent “exit scams” was the collapse of Canadian exchange QuadrigaCX. In early 2019, the exchange disclosed, months after the fact, that founder Gerald Cotten had died of complications from Crohn’s disease while on a trip to India. His sudden death, according to the exchange, had cut off access to the “cold wallets” holding $145 million in customer tokens. Withdrawals were frozen and the firm eventually entered bankruptcy.

David Z. Morris is CoinDesk's Chief Insights Columnist.

Angry customers and inquisitive journalists, naturally, did not take claims of Cotten’s death at face value. Instead, they started digging and quickly realized that Gerald Cotten had never been quite the upstanding citizen his clean-cut image suggested. Speculation quickly spread that Cotten had faked his death and emptied out the Quadriga piggy bank.

“Exit Scam” is a new podcast that pulls together all the strands of the complex Quadriga story into a compelling eight-part yarn. The show is produced and hosted by Aaron Lammer, also a host of the “Longform” podcast, and it offers some truly surprising insights into the case’s core question: Did Gerald Cotten really die in India from complications of Crohn’s disease? Or did he steal customer funds and fake his own death?

The surprising answer that seems increasingly plausible after listening to “Exit Scam” is: “Both.”

“I think it’s been pretty well proven that Cotten was criminal in the way he operated his exchange,” says Lammer. “And he strategically extracted crypto from that exchange over time with the intent to defraud his users.”

According to postmortem findings by auditor Ernst & Young, Cotten used fake accounts on his own exchange to buy customers’ bitcoin using Canadian dollars that didn’t exist, and then moved those stolen tokens to take risky bets on other exchanges. Cotten had also taken flying lessons and made other preparations that would have been useful for a life on the lam. His will was signed just two weeks before the ill-fated India trip, and included C$100,000 (US$81,000) left to his two dogs. Most shocking of all, the mild-mannered Canadian had a track record of deception and theft going back to his teenage years.

And yet, according to every piece of evidence Lammer could dig up, Gerald Cotten really did die unexpectedly in India. “Exit Scam” includes interviews with journalists who retraced Cotten’s death, and found no credible evidence of forgery, body doubles or other foul play. Canadian law enforcement agencies seem satisfied, and have refused to exhume Cotten’s body for DNA testing.

What happened to Cotten’s wife, Jennifer Robertson, strikes me as the clearest evidence that his death was truly accidental. Robertson accompanied him to the hospital where he died, and so would have had to be a knowing collaborator if his death was faked. But if she was a collaborator, she didn’t get much for her trouble: Robertson appears to have walked away with next to none of the remaining ill-gotten Quadriga money that for a time fueled the couple’s luxurious, globe-trotting lifestyle. Even Cotten’s dogs wound up empty-pawed.

The happy scammer

Even if it doesn’t solve the Quadriga mystery, “Exit Scam” is worth your while for its insights into an even stranger question: What made Gerald Cotten a lifelong and passionate thief?

Cotten’s history of malfeasance, uncovered in part by investigator Amy Castor, began when he was just 15 years old. That was when he entered the shady world of online “high-yield investment programs” (aka HYIPs, aka Ponzi schemes). It was through that world that he became familiar with digital currencies: Well before Bitcoin even existed, Cotten was working with future QuadrigaCX co-founder Michael Patryn to help HYIP operators and others redeem or move their eGold, a gold-backed digital token later shut down by the FBI for its role in money laundering.

The postmortem discovery of Cotten’s long history of illicit involvements was shocking in part because the soft-spoken Canadian appeared to be trustworthy and mild-mannered to many. “Exit Scam” features interviews with longtime crypto veterans who worked closely with Cotten and found him entirely credible. 

Moreover, Cotten would have had plenty of money thanks to his genuinely visionary early stake in crypto. “He was a presale Ethereum buyer,” Lammer points out. “If he’d never gotten involved in the exchange, he would have been rich.”

Some of the blame for Cotten’s dark path may lie with Michael Patryn. Patryn, a fellow Canadian whose role at QuadrigaCX had been occasionally nebulous, was one of the first threads investigators pulled after Cotten’s death. It was quickly discovered that Patryn’s real name was Omar Dhanani – he had changed it after being convicted of identity fraud and spending time in federal prison in the U.S. Patryn was an older, seasoned operator when he met Cotten on an HYIP message board, and they quickly became collaborators.

But Lammer thinks Cotten’s own thrill-seeking was just as much of a factor as any bad influence. “My read was that, on some level, Gerry was addicted to scamming,” the host says. “Addicted to stealing people’s money. This was more of a gambler’s high than a rich guy’s high … as he pursued more and more of other people’s money, the stakes went up.”

All that helps explain the seemingly implausible coincidence that Cotten died at the exact point when he stood to benefit most from disappearing. Cotten a) had a serious medical condition, and b) had been in the middle of one illicit financial operation or another for years. He could have died at nearly any moment since 2010 and been plausibly suspected of faking it to disappear with somebody’s money.

Gerald’s final thrill may have come from his misuse of customer funds in the months leading up to his death. Cotten created a Quadriga customer account under the false name “Chris Markay” and funded it with fictitious Canadian dollars. He used those fake dollars to buy customers’ cryptocurrencies, and then moved them to other exchanges. “He was putting money on other exchanges and doing risky, degen stuff with it,” says Lammer. Most importantly, Cotten wound up very long ETH in late 2018.

That turned out to be a very bad bet: ETH crashed by more than 90% over the course of 2018, and stayed in the basement until late 2020. According to an investigation by the Ontario Securities Commission, Cotten’s huge speculative losses on bets made with stolen customer funds made up the bulk of roughly C$115 million ($93 million USD) missing from QuadrigaCX’s balance sheet in the final accounting.

Gerald Cotten’s gambling before his death, rather than a fake death enabling an exit scam, seems to be why Quadriga’s cold wallets were empty. That C$115 million “was more money than Quadriga made the entire time it was in business,” Lammer says. “That’s not just an ‘L.’ You can’t recover.”

Crime doesn’t pay (no, seriously)

This is how the story usually ends for habitual gamblers, of any stripe. Whether you’re pushing regulatory boundaries, hoping nobody comes after you when a pyramid scheme collapses, or just day-trading shitcoins, the thrill of winning can make bigger risks seem appealing. But of course, everyone loses eventually – and by the time Cotten started losing, his bets were more than big enough to wipe out a lifetime of gains. Though the extent of his personal crypto holdings remain largely opaque, there simply wasn’t much left to take from QuadrigaCX by late 2018.

So while it doesn’t definitively answer the mystery of Gerald Cotten, “Exit Scam” still rewrites the story we thought we knew.

“We thought we were looking for basically a rich guy who had stolen money,” says Lammer. “Now either [Cotten is] dead, or if he’s alive, he’s a gambling addict who’s broke.”