Some $190 million in customer funds consisting of both cryptocurrency and regular money is apparently gone in what appears to be an “exit scam” involving Canadian exchange QuadrigaCX.

In one of the most fanciful stories ever told in relation to a crypto exchange, the company claims that 30-year-old founder Gerald Cotten (pictured) had died of Crohns Disease while in India and that he was the only person who had access to the exchange’s cold storage wallets. Put more simply, the company claims it can’t get access to the funds.

“We have thousands of wallet addresses known to belong to QuadrigaCX and are investigating the bizarre and, frankly, unbelievable story of the founder’s death and lost keys,” Kraken Inc. Chief Executive Officer Jesse Powell told CCN. “I’m not normally calling for subpoenas but if the Royal Canadian Mounted Police are looking into this, contact Kraken.”

According to a filing from the company Jan. 31, QuadrigaCX held about 26,500 bitcoin, 11,000 Bitcoin Cash, 11,000 Bitcoin Cash SV, 35,000 Bitcoin Gold, 200,000 Litecoin and 430,000 Ethereum collectively worth about $147 million. The remaining balance of $43 million consists of fiat currency held in bank accounts, a number of which the exchange claims have been suspended pending a court hearing.

The likelihood of the lost-key scenario has quickly started to unravel, with various reports of cryptocurrency being moved out of wallets run the company, something that would be impossible without access. On a Reddit thread, a user details multiple cases of Litecoin being moved from wallets owned by QuadrigaCX after the founder was supposed to have died.

It another sign of a potential scam, one researcher claims that the exchange never held the amount of bitcoin it claimed and instead enlisted the use of fractional reserves to service its customers, using client deposits to issue withdrawals.

Ultimately it will be up to the courts to decide whether QuadrigaCX is lying or not, but most researchers believe it is.

“The people trying to pull off a QuadrigaCX exit scam could actually be the family and other employees, by hiding the fact that the cold wallet keys are known,” bitcoin analyst Peter Todd told CCN. “Not saying this is happening, but need to consider all possibilities fairly in the investigation.”

Photo: QuadrigaCX