British Columbia Files Unexplained Wealth Order Against Co-Founder of Defunct Cryptocurrency Exchange Quadriga

Michael Patryn, the cofounder of the now-defunct QuadrigaCX cryptocurrency exchange, may face the forfeiture of sizable assets, including cash, gold, and high-end goods if he fails to demonstrate they were acquired through legal means.

The Civil Forfeiture Office in B.C. is pursuing an “unexplained wealth order”—a contentious new measure in British Columbia—that could lead to the seizure of assets worth $250,200 in cash, 45 bars of gold, four premium watches, and various pieces of expensive jewelry belonging to Michael Patryn.

Patryn cofounded the once-prominent Canadian digital currency platform QuadrigaCX with Gerald Cotten in 2013. Following the untimely death of Cotten in December 2018 during a honeymoon in India, the exchange went bankrupt, leaving users without access to their accounts as Cotten was the sole possessor of the wallet keys.

Only a fraction of the assets, approximated at $46 million, was recovered by the bankruptcy trustee, Ernst & Young, from the over $300-million claimed by numerous creditors.

Subsequent to an Ontario Securities Commission investigation, it was disclosed that Cotten operated QuadrigaCX akin to a Ponzi scheme, engaging in deceitful trading and inflicting major losses on its clients.

As reported by The Globe, Patryn, who previously served a sentence in the US for his involvement with the illicit site Shadowcrew.com, was named Omar Dhanani while residing in California.

The request for the unexplained wealth order filed with the British Columbia Supreme Court is B.C.’s third since new legislation last year aiming to streamline seizure of properties or valuables linked to criminal gains.

B.C.’s adoption of these legal instruments, recommended by an independent money laundering panel, transfers the burden of proof to the defendant who must then demonstrate the lawful acquisition of assets under question—albeit the method attracts criticism for appearing less stringent than criminal trial procedures.

Mike Farnworth, B.C.’s Public Safety Minister, emphasized the government’s dedication to anti-crime actions by referencing the order application.

The Director of Civil Forfeiture in B.C. made a claim in court in June 2023 for items taken from Patryn’s safety deposit box at CIBC in Vancouver, insinuating that they were accumulated through illegal activities, a claim supported by RCMP evidence of both Patryn and Cotten misusing QuadrigaCX funds for personal gain.

These allegations have yet to be confirmed in a judicial setting.

According to documents, Patryn asserts he departed from the company in 2016 and denies participation in any QuadrigaCX fraud, suggesting it occurred post his exit.

A 2021 seizure from the named safety deposit box yielded cash, gold, watches, jewelry, cheques, identity documents, along with a loaded .45 calibre pistol. The RCMP’s follow-up steps on Patryn’s inquiry remain undisclosed.

Patryn’s legal representative has not commented on the unexplained wealth order situation, while Patryn himself has refuted the illegal provenance of his seized assets.

Patryn is believed to be in Thailand, as per the latest court records available.