The tale of failed Canadian cryptocurrency exchange QuadrigaCX has turned downright ridiculous as a court-appointed auditor found that many of the wallets storing allegedly inaccessible cryptocurrencies are actually empty.

The drama surrounding QuadrigaCX started when the exchange ceased business late January. QuadrigaCX claimed that it was unable to access customer funds because founder Gerald Cotten, who allegedly died of Crohn’s disease while in India, was the only person who had the keys to and hence access to the cold-storage cryptocurrency wallets in which the funds were held.

A Canadian court later appointed Ernst & Young Inc. to audit the company, and it released the third update Friday. E&Y claimed that it has identified six separate wallets used by the company to store customer funds and, apart from a deposit of about $500,000 in bitcoin, one alleged by QuadrigaCX to have been sent by accident, there had been no deposits in the wallets since April 2018.

Worse still, the wallets, the one deposit aside, were empty. The E&Y report does not rule out that other cold-storage wallets may have been used by the company, but it noted that it does not know yet why the identified wallets had ceased to be used given that they were wallets identified by the company itself.

It’s not a good sign for customers attempting to recover their lost funds because it adds to the suggestion that QuadrigaCX may have been an exit scam, but there is still some hope. The report noted that it’s possible Cotten may have been storing customer cryptocurrency balances with third-party cryptocurrency exchanges and a separate report may have uncovered missing Ethereum.

In a blog post published Feb. 28, Zerononcense claimed to have traced the movements of Ethereum from QuadrigaCX wallets and that there is “very strong possibility” that missing ETH balances are being held at three exchanges: Kraken, Bitfinex and Poloniex.

“It appears that a significant amount of Ethereum (600,000+ ETH) was transferred to these exchanges as a means of ‘storage’ during the years that QuadrigaCX was in operation and offering Ethereum on their exchange,” the report noted.

Adding credibility to the report, Zerononcense said corroborating information was provided from Jesse Powell, chief executive officer of Kraken, and Taylor Monahan, CEO of MyCrypto.

At today’s exchange rate, 600,000 ETH is worth about $77 million but could have been worth as much as $100 million at the time it was transferred. Presuming the report is accurate and the Ethereum does belong to QuadrigaCX, that could possibly account for half of the missing cryptocurrency from customers.

Although Zerononcense claimed the funds should be easy to retrieve and that doing so could allow the QuadrigaCX to regain solvency, it still does not account for the other missing cryptocurrency balances — in particular, the missing bitcoin.

Image: 87249144@N08/Flickr