A still image of Michael Patryn from a YouTube interview that was streamed live in 2015. The RCMP has seized items from a safety deposit box belonging to the Quadriga co-founder.YouTube
Former users of QuadrigaCX could receive additional payments now that a co-founder of the defunct cryptocurrency exchange has forfeited the contents of his safety deposit box to the B.C. government.
The province’s Civil Forfeiture Office was granted a default judgment earlier this year resulting in the forfeiture of $250,200 in cash, 45 gold bars, four luxury watches and several items of pricey jewellery.
The items were seized by the RCMP from a safety deposit box at a Canadian Imperial Bank of Commerce branch in Vancouver belonging to Quadriga co-founder Michael Patryn. The gold alone is valued at more than $700,000 based on current prices.
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The Globe and Mail previously reported that Mr. Patryn is a convicted felon who twice changed his name and served time in prison in the United States for his role in an online marketplace trafficking in stolen credit card numbers and identities.
He later founded Quadriga Fintech Solutions Corp. with Gerald Cotten, who died in late 2018, leaving thousands of QuadrigaCX users unable to access hundreds of millions of dollars in funds and triggering the company’s collapse. (Mr. Patryn has said he cut ties with the company before its implosion.)
The Ontario Securities Commission issued a report in 2020 that found Mr. Cotten ran the company like a Ponzi scheme and engaged in fraudulent trading that resulted in substantial losses for the exchange’s users.
Quadriga chief executive Gerald Cotten. Cotten died in 2018, leaving thousands of QuadrigaCX users unable to access hundreds of millions of dollars in funds.Facebook
B.C.’s Director of Civil Forfeiture filed a claim against Mr. Patryn in June, 2023, alleging the goods retrieved from his safety deposit box are the proceeds of unlawful activity. The director had also filed an application for an unexplained wealth order, which, if granted, would have compelled Mr. Patryn to prove that he had acquired the property through legal means.
Mr. Patryn filed a response to the civil claim, stating that the property had not been obtained through criminal activity and that the police had violated his Charter rights by unlawfully sharing evidence with the civil forfeiture agency. However, he withdrew his response to the claim in March.
In September, the Supreme Court of British Columbia granted a judgment in favour of the Director of Civil Forfeiture.
Mr. Patryn’s lawyer did not respond to a request for comment.
Since the fall of Quadriga, Mr. Patryn has launched a cryptocurrency token called Sifu Vision and posts on a Discord server for investors, discussing weightlifting, a pet tiger and financial markets. He wrote earlier this year that he has started investing in real-world assets, including startups.
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Court documents in the civil forfeiture case note that the money and net sale proceeds of the goods will be held pending a determination of interest in the assets by Quadriga’s bankruptcy trustee, Ernst & Young Inc.
Jeffrey Simser, a lawyer and asset forfeiture and anti-money-laundering expert, said that under civil forfeiture laws, victims get a first claim to the money forfeited.
“This is a great example of how civil forfeiture can work in a positive way for victims,” Mr. Simser said.
However, any potential payouts are not likely to amount to much for the exchange’s thousands of users.
In 2023, Ernst & Young told the affected users that they would receive 13 per cent of the funds they had stored with the cryptocurrency exchange because much of the money owed to them could not be found.
More than 17,600 claims were submitted, with amounts ranging from a few hundred dollars to a few million dollars, according to Ernst & Young. Altogether, creditors said they were owed $303-million but received just $39.5-million.
Ernst & Young declined to comment on the forfeiture case.