cryptocurrency

The Secret Life and Strange Death of Quadriga Founder Gerald Cotten – Vanity Fair


Gerry’s alive.

“HE WAS NOT AN EVIL DUDE”

The initial portrait of Cotten that emerged in February 2018, once his death was announced through a Quadriga Facebook post, squared with the yacht salesman’s impressions. Cotten was a computer nerd who had entered the right business at the right time and succeeded beyond his wildest dreams. The broad outlines of his story were blandly conventional, at least if you subtracted his interest in decentralized monetary systems. He grew up in a large brick house on a quiet suburban street in Belleville, “The Friendly City,” a waterfront community between Toronto and Montreal best known for its cheddar cheese. In 2010 he graduated with a bachelor’s degree in business administration from an honors program at York University’s Schulich School of Business in Toronto. His parents owned an antiques store; Cotten decided to go into crypto.

A couple of years after graduation, Cotten moved to Vancouver and joined a clubby community of entrepreneurs who had become enamored with Bitcoin. He attended meetups at coffee shops and dorm rooms, organized by a core group of about 10 people, who called themselves the Vancouver Bitcoin Co-op. Most of these early acolytes were drawn to the digital currency’s libertarian ethos, its promises of decentralization, transparency, speed, and independence from governments and financial institutions. Bitcoin would enable more than two billion people who lacked access to banks to send and receive payment; it would offer stability to citizens of countries with chaotic currencies; it would eliminate all banking fees.

Cotten knew the catchphrases and the talking points, but he seemed most interested in Bitcoin’s speculative possibilities. The first Bitcoin block was created on January 3, 2009, and the currency gained economic value on May 22, 2010, a date enshrined in Bitcoin lore as “Pizza Day,” when a Florida man paid someone in England 10,000 Bitcoins to order him two pizzas from Papa John’s. The pizzas cost about $25, setting the price of a Bitcoin at one fourth of a penny. (At press time those pizzas would be valued at $82,373,500.) With that, Bitcoin became like any other form of currency, a mass delusion: Its value derived from the belief that it had value.

In April 2013, around the time that Cotten appeared in Vancouver, the price of a Bitcoin had risen to $266. But it was not easy to buy or sell if you lacked technological sophistication and considerable patience. Seventy percent of the global Bitcoin trade was conducted through Mt. Gox, a Tokyo-based exchange, and had to be funded by sending a bank wire to Japan. Because Canadian banks wanted nothing to do with Bitcoin, users had to transfer funds through a series of intermediaries, bleeding transaction fees. “It was so hard to buy Bitcoin in Canada,” says Cotten in his unflappably peppy, inquisitive voice, in a 2014 interview. “You couldn’t hook up your bank account to anywhere. It was just such a challenge.”

In November 2013 Cotten and an older business partner, Michael Patryn, an authority on currency trading with passions for Brazilian jujitsu and luxury automobiles, incorporated the Quadriga coin exchange, or QuadrigaCX (named, for reasons that were not immediately clear, after the horse-drawn chariots of the Roman Empire). In a small, inefficient market, Quadriga swiftly distinguished itself. It was the cheapest exchange, the fastest, and, by all appearances, the safest—the first Bitcoin trading platform to hold a money-services business license from FinTRAC, Canada’s anti-money-laundering authority. Quadriga installed a Bitcoin ATM in its office, the second of its kind in Canada, and accepted gold by the ounce, which could be dropped off in person. Investing with Quadriga was even patriotic: “People like the fact we’re located in Canada,” Cotten told an interviewer, a point he often emphasized. “They know where their money is going.” Quadriga launched on Boxing Day.

Cotten’s efforts to win the trust of Bitcoin enthusiasts relied on his reputation in Vancouver, where he had become a director of the Bitcoin Co-op. He began to host the weekly meetups at Quadriga’s office. Quadriga sponsored local Bitcoin conventions and educational events, investments of $500 or $1,000 that yielded incalculable goodwill. Often Quadriga was the only Bitcoin company willing to pay for a sponsorship. “From our perspective, we needed Quadriga,” says Andrew Wagner, who at the time was the co-op’s director of public relations. “Without them, our events would have stopped. It put us in a particular place of need.”



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