QuadrigaCX operated like a Ponzi scheme.

That’s the key finding of an Ontario Securities Commission (OSC) report made public Thursday.

OSC, one of Canada’s provincial securities regulators, said the now-defunct cryptocurrency exchange, which went into bankruptcy a few months after founder and CEO Gerald Cotten was reported to have died in India, “was an old-fashioned fraud wrapped in modern technology.”

The report, dated April 2020 but released publicly on Thursday, took aim at Cotten’s practices, including allegations that he traded against his own customers, set up fake accounts on other exchanges to trade using his customers’ funds and failed to maintain records. These allegations have been made in the past by Ernst and Young (EY), a court-appointed auditor tasked with recovering customer funds following the exchange’s February 2019 collapse.

The company has recovered about C$46 million to date.

“In 2016 he became the only person in control of these assets,” the report said, adding:

"The evidence shows that Cotten regularly moved clients’ crypto assets off the Quadriga platform and into accounts he had opened on other crypto asset trading platforms. At one point, Cotten told a Quadriga contractor that a certain wallet address was a Quadriga cold storage address, when it was really a deposit address for Cotten’s account at another crypto asset trading platform."

While it has been speculated that the missing customer funds – close to $200 million – were lost because Cotten was the only individual to control his exchange’s crypto wallets, OSC said in its report that in reality, Cotten lost the funds through “fraudulent conduct.” The regulator totaled this at about C$169 million.

“The bulk of the asset shortfall – approximately $115 million – arose from Cotten’s fraudulent trading on the Quadriga platform. Cotten opened Quadriga accounts under aliases and credited himself with fictitious currency and crypto asset balances which he traded with unsuspecting Quadriga clients. He sustained real losses when the price of crypto assets changed, thereby creating a shortfall in assets to satisfy client withdrawals,” the report said.

The OSC put the report together by interviewing former Quadriga contractors, advisers, clients and his widow, Jennifer Robertson. Quadriga co-founder Michael Patryn did not respond to a request for comment, though OSC said a majority of the lost funds were deposited after Patryn’s departure from the exchange in 2016.

Robertson declined to comment on the report.

“What happened with Quadriga was an extreme example, and not necessarily representative of the broader crypto asset trading platform industry. However, these events serve to highlight for investors the risks that can arise in relation to crypto asset trading platforms, particularly those that are not registered,” the report said in its conclusion.