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Man Lost $500,000 of Life Savings in Cryptocurrency Exchange ‘Scam’ After Trader ‘Died with Password to Funds’ | Science & Technology News
The case is now explored in a new Netflix documentary featuring Tong Zou, after losing around C$500,000 (£306,000), including $200,000 given to him by his parents.
By David Mercer, Editor-in-Chief @DavidMercerSky
Wednesday 30 March 2022 03:25, United Kingdom
Tong Zou tries to avoid thinking about the amount of money he lost.
The 33-year-old saw his life savings wiped out when a cryptocurrency trading operation ended disastrously for him.
“It just makes me feel more depressed,” he tells Sky News.
“I could have invested it in real estate. I could have put it in stocks.
“Nothing has been found so far. It sucks.”
Mr. Zou had entrusted his money to Canada’s largest cryptocurrency exchange, Quadriga CX, whose co-founder has since died apparently with the password to his clients’ funds.
The mysterious death of Gerald Cotten at age 30 has left tens of thousands of investors penniless and sparked speculation that he may still be alive.
Image: Gerald Cotten’s death was announced in January 2019. Photo: Netflix
It later emerged that before his death Mr Cotten had been running a Ponzi scheme, which investigators described as “an old-fashioned fraud masquerading as modern technology”.
The case is now being explored in a new Netflix documentary featuring Mr Zou, after losing around C$500,000 (£306,000), including $200,000 given to him by his parents.
“A lot of people want to blame me for this,” he says.
“Yes, I deserve some of the blame because it’s irresponsible. I should have done more research.
“It’s also bad luck, timing. How was I to know?”
“I think I trusted them a lot.”
By 2018, Mr. Zou had accumulated massive debt after taking out $80,000 in loans to buy Bitcoin, before the cryptocurrency’s value collapsed that year.
Image: Tong Zou wanted to transfer money from the US to Canada using a cryptocurrency exchange
The computer engineer decided to sell his San Francisco apartment to pay off his debts and planned to move to Vancouver.
He needed to transfer his $400,000 USD to his Canadian account, but wanted to avoid bank fees.
“I was thinking about alternative ways to do it, that would save me some money,” he says.
Mr. Zou claims to have successfully used other cryptocurrency exchanges in the past and knows friends who have used Quadriga.
“I think I trusted (Quadriga) a lot,” he adds.
“I did some research on Reddit. They said, ‘Oh, it’ll take a while, but you’ll always get your money. It’s not a scam.'”
Mr. Zou purchased Bitcoin with his own money before selling the cryptocurrency on Quadriga, expecting C$500,000 to be transferred to his Canadian bank account.
But three months later, there was still no sign of the money.
Image: Netflix is streaming a new documentary titled Trust No One: The Hunt For The Crypto King. Photo: Netflix
“I could not sleep”
After repeatedly emailing Quadriga, he says the company attributed the delay to a legal battle it was waging with a bank.
“I kept asking them, ‘Where’s my money?’ — October, November, December — all that time,” she says.
“They kept saying it was the lawsuit’s fault.
“I couldn’t sleep. I just prayed. I really prayed that it wasn’t a scam.
“My parents were worried too.
“At that time, there was nothing I could do. There was no way I could get my money back.
“Once it was deposited, it was virtually gone.”
He added: “It turned out to be a scam.”
Mr Zou said that although his mother felt sympathy for him, he did not tell his father, who only learned of the loss of money when his son appeared on the news.
Asked about his father’s reaction, Mr Zou said: “We try to avoid talking about it.”
The Mystery of Cryptocurrency Trader Gerald Cotten
- The death of Quadriga CX CEO Gerald Cotten was announced in January 2019
- The 30-year-old died “due to complications from Crohn’s disease” during a trip to India the previous month, his wife Jennifer Robertson said.
- After his death, Quadriga said it could not refund $190 million (£110 million) to customers because Mr Cotten had died with the password to access the funds
- Mrs Robertson said her husband was “solely responsible for managing the funds and coins” and that no other team member had access to the deposited funds.
- She claimed that she had her husband’s laptop but did not know the password and that a technical expert they had hired had failed to bypass the encryption.
- Auditors, who were called in to help recover the cryptocurrency, gained access to Mr Cotten’s laptop but discovered that the digital wallets stored there had been emptied in April 2018, eight months before his death.
- A regulator found that, faced with losses caused by the changing price of cryptocurrencies, Mr. Cotten covered the resulting deficit with deposits from other customers.
- Mrs Robertson reportedly said she was “shocked and disappointed” to learn of the extent of the fraud at her husband’s business and insisted she had no knowledge of it or been involved.
Asked whether he believed Mr Cotten was dead, Mr Zou replied: “That’s my belief, not everyone’s belief.
“I’m 80 percent sure he’s dead.
“If there was a time to fake his death, it would have been at the end of 2017, when (the value of the cryptocurrency) was really high.
“The timing didn’t make sense to me.”
Mr Cotten’s widow, Jennifer Robertson, who has denied any knowledge of her husband’s wrongdoing, said she had received threats from online cryptocurrency communities.
Image: Gerald Cotten and Jennifer Robertson. Photo: Netflix
A regulator has found that about 76,000 investors collectively lost at least C$169 million in Quadriga’s 2019 collapse.
About $115 million, it said, was owed to Mr. Cotten’s fraudulent activities.
Mr Zou is now embroiled in a lawsuit aimed at recovering money from those who lost funds to Quadriga, but he said there had been no significant updates since 2020.
He says he hopes Netflix’s new documentary means “maybe they can get moving and do something about it.”
“I want to share my story so this doesn’t happen to other people,” she adds.
Mr. Zou, who currently lives in a rented apartment in Vancouver, says he has now “completely abandoned cryptocurrencies.”
“I have a little bit,” he says.
“I don’t have that much, maybe to say that I still have something inside, but I don’t pay attention to it.
“I don’t know how important cryptocurrencies will be in the future, but they will be there.”
Trust No One: The Hunt For The Crypto King is now available to stream on Netflix.