# Cryptocurrency investors locked out of $190m after exchange founder dies



## BarberFerdinand (Feb 5, 2019)

https://www.theguardian.com/technol...-cryptocurrency-exchange-locked-gerald-cotten (http://archive.fo/g4ES5)


> About $190m in cryptocurrency has been locked away in a online black hole after the founder of a currency exchange died, apparently taking his encrypted access to their money with him.
> Investors in QuadrigaCX, Canada’s largest cryptocurrency exchange, were unable to access their funds after its founder, Gerald Cotten, died last year.
> 
> According to a court filing first reported by CoinDesk, a cryptocurrency news and events company, Jennifer Robertson, identified as Cotten’s widow, said the exchange owes its customers roughly C$250m (US$190m) in cash and cryptocurrency held in its “cold storage”.
> ...


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## Judge Holden (Feb 5, 2019)

Obligatory






Still if anybody is autistic and obsessive enough to jewcrack the password then its the crypto kiddies. Especially when they have a fifth of a billion dollarydoos on the line


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## DangerousGas (Feb 5, 2019)

This is a terrible starting post.

I read about this a day or so back, and basically the guy who ran this crypto exchange kept all the core keys on a heavily encrypted laptop, that only he had the passwords for. Ergo, when he croaked, everyone else was fucked.
Mildly lulzy, but meh.


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## The Manglement (Feb 5, 2019)

I think you're missing the funniest part of the story. He died in India due to 'complications related to Crohn's Disease'. He traveled to India on a charitable trip and literally shit himself to death.


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## Jeb-sama (Feb 5, 2019)

Judge Holden said:


> Obligatory
> 
> 
> 
> ...



Nah that shits too hard to crack 

There's a few ridiculously large abandoned bitcoin wallets out there that have more than a billion dollars worth just sitting inside, completely  untouched since 2010/2011


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## m0rnutz (Feb 5, 2019)

Jeb-sama said:


> Nah that shits too hard to crack
> 
> There's a few ridiculously large abandoned bitcoin wallets out there that have more than a billion dollars worth just sitting inside, completely  untouched since 2010/2011


Go on. Keep talking.


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## Jeb-sama (Feb 5, 2019)

m0rnutz said:


> Go on. Keep talking.




Not much else to say

Here's an example of a single wallet I'm talking about

https://bitinfocharts.com/bitcoin/address/1FeexV6bAHb8ybZjqQMjJrcCrHGW9sb6uF

It's fallen a lot in value since last I checked, but 275 million is still pretty decent.

There's no way in hell the owner still has access to it. You don't watch your 74K investment grow into 1.5 billion without selling anything


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## Slutpuppies (Feb 5, 2019)

Talk about a comedy of errors... 








Spoiler



Canada's leading cryptocurrency exchange company has said it cannot repay $190m (£110m) to clients because its founder died with their passwords.

QuadrigaCX's founder Gerald Cotten, 30, died "due to complications with Crohn's disease" while travelling in India to open an orphanage in December, his wife Jennifer Robertson said.

Mr Cotten held "sole responsibility for handling the funds and coins" and no other members of the team could access the stored funds, she said in a sworn affidavit as she filed for credit protection on 31 January.

Ms Robertson said about $190m (£110m) in both cryptocurrency and normal money is in "cold storage" - where the company, or just Mr Cotten in this case, holds the key, not the client.

The founder held "sole responsibility for handling the funds and coins" and no other members of the team could access the stored funds, she added.

She has her husband's laptop but she does not know the password and a technical expert they hired had not been able to bypass its encryption, she told the court.

Ms Robertson added in the affidavit that she and her colleagues have had threats made against them from online cryptocurrency communities - especially from Reddit users.







On 31 January the company's board of directors applied for creditor protection, with Ernst & Young expected to be appointed on Tuesday to oversee the proceedings.

A statement from the board said: "For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us.

"Unfortunately, these efforts have not been successful."

QuadrigaCX customers have been complaining on social media that they have not been able to withdraw money from their accounts.

Ally Shapoval wrote: "Hello, Quadriga! I withdrew money from my Quadriga account to my bank more than 2 weeks ago. WHERE IS MY MONEY? STILL NOT THERE.

"I sent you emails, you are not responding."

Another wrote in French: "I have sent lots of emails, but I just get automatic responses, I'm not even able to get my crypto out."

Some are questioning whether Mr Cotten is even dead and others have accused the company of lying to them.



https://www.msn.com/en-gb/news/world/crypto-boss-dies-suddenly-with-password-to-clients-£110m/ar-BBTawfb?li=BBoPWjQ


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## not william stenchever (Feb 5, 2019)

So that's a lot of money just lying there. A government level entity of some kind is going to try to break into that shit, legally or otherwise.



Slutpuppies said:


> QuadrigaCX's founder Gerald Cotten, 30, died "due to complications with Crohn's disease" while travelling in India to open an orphanage in December, his wife Jennifer Robertson said.


 Jesus Christ he literally died in India while unable to streetshit. I just... did god cook up this whole "existance" thing so that the jokes would write themselves?


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## MuuMuu Bunnylips (Feb 5, 2019)

not william stenchever said:


> So that's a lot of money just lying there. A government level entity of some kind is going to try to break into that shit, legally or otherwise.



*Looks up from keyboard*

Huh? Yeah. Those fucking government types. Always trying to steal everyone's money.

*goes back to typing*

Don't mind me, I'm just looking up porn.

Yup. Just porn.

That's the ticket.


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## not william stenchever (Feb 5, 2019)

You'd have to be an idiot if you were, for example, the CIA and _didn't_ try to hack into the 190 million dollar cryptocurrency wallet of a dead man.


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## DragoonSierra (Feb 5, 2019)

@CrunkLord420


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## CrunkLord420 (Feb 5, 2019)

DragoonSierra said:


> @CrunkLord420


Yeah I've been following closely, here's the run down. I've been lazy to post it.


QuadrigaCX has had significant issues with banking and payment processors for over a year, including a large bank (CIBC) freezing millions of dollars in their bank account, which they had to take them to court over
As a result of their inability to process fiat withdrawals they've had a significant price premium, but the ability to arbitrage has been limited due to 1-3 month turn around.
QuadrigaCX has been functionally on fractional reserve during this time

This banking issue has not affected other Canadian exchanges, and seems to be targeted at QuadrigaCX for some unknown reason
There have been long persistent rumors that Michael Patryn (QuadrigaCX co-founder) is actually Omar Dhanani, a convicted felon and money launderer
The other QuadrigaCX co-founder Gerald Cotton gets married, has his will arranged to everything goes to his new wife (and $100k to both of his dogs), goes to India to build an orphanage for their honeymoon, dies from Crohn's disease which is apparently something you don't just suddenly fall over dead from.
Gerald Cotton was the only one with the cold wallet keys (despite claiming it was multisig), on his personal laptop (not a cold wallet), which he traveled with (a crime to bring that much money over borders). This is methodology (or lack thereof) is unheard of in exchange cold wallet operations.
No cold wallet addresses have been provided to the courts. People have been digging through blockchain analysis to identify them. The wife's affidavit states that Gerald was investigating storing the cold wallet coins on other exchanges (not a cold wallet, also wtf).
Blockchain analysis suggests QuadrigaCX continued to operate without BTC reserves for months, and only could approve BTC withdraws from other customers deposits.
Kraken CEO Jesse Powell states: "We have thousands of wallet addresses known to belong to @QuadrigaCoinEx and are investigating the bizarre and, frankly, unbelievable story of the founder's death and lost keys. I'm not normally calling for subpoenas but if @rcmpgrcpolice are looking in to this, contact @krakenfx"
Jesse Powell: "As far as I know, a death certificate has been produced by a Canadian funeral home. Who knows if it's legit. We also don't know if there were any witnesses or an autopsy, or whether any authorities in Canada have seen the body and verified identity."
Courts approve 30 day bankruptcy protection, the wife does not show up due to "safety concerns"
RCMP begins to investigate
The wife has a private jet.
Reading the subreddit has been a wild ride. Every day there's something new. https://twitter.com/JackJulian/status/1092807578025902082 (https://archive.vn/7hxMb)


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## DangerousGas (Feb 6, 2019)

I wouldn't trust anyone with such a poverty-spec stove with any kind of financial authority.


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## WW 635 (Feb 7, 2019)

*Crypto CEO Dies Holding Only Passwords That Can Unlock Millions in Customer Coins*
By 
Doug Alexander
February 4, 2019, 12:54 PM EST

Without digital keys, clients lose access to coins, funds
Board said last week that it was seeking creditor protection
Digital-asset exchange Quadriga CX has a $200 million problem with no obvious solution -- just the latest cautionary tale in the unregulated world of cryptocurrencies.

The online startup can’t retrieve about C$190 million ($145 million) in Bitcoin, Litecoin, Ether and other digital tokens held for its customers, according to court documents filed Jan. 31 in Halifax, Nova Scotia. Nor can Vancouver-based Quadriga CX pay the C$70 million in cash they’re owed.

Access to Quadriga CX’s digital “wallets” -- an application that stores the keys to send and receive cryptocurrencies -- appears to have been lost with the passing of Quadriga CX Chief Executive Officer Gerald Cotten, who died Dec. 9 in India from complications of Crohn’s disease. He was 30.

Cotten was always conscious about security -- the laptop, email addresses and messaging system he used to run the 5-year-old business were encrypted, according to an affidavit from his widow, Jennifer Robertson. He took sole responsibility for the handling of funds and coins and the banking and accounting side of the business and, to avoid being hacked, moved the "majority" of digital coins into cold storage.

His security measures are understandable. Virtual currency exchanges suffered at least five major attacks last year. Japan, home to some of the world’s most active digital-asset exchanges, has also hosted two of the biggest known crypto hacks: the Mt. Gox debacle of 2014 and the theft of nearly $500 million in digital tokens from Coincheck Inc. last January. 

*Quadriga CX’s directors posted a notice on the firm’s website on Jan. 31 that it was asking the Nova Scotia court for creditor protection while they address “significant financial issues" affecting their ability to serve customers. A hearing is scheduled for Tuesday, and Ernst & Young has been chosen as a proposed monitor.

“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us," the firm said. “Unfortunately, these efforts have not been successful."

As is often the case with crypto, the episode has raised speculation on Reddit’s online forums, where posters are wondering aloud if the business was a scam, calling for class-action lawsuits and even concocting conspiracy theories that call into question whether the CEO is even deceased. The latest online speculation suggests that Quadriga CX funds have been moving -- even though the firm claims they can’t get access.







https://www.bloomberg.com/news/arti...ounder-dies-leaves-behind-200-million-problem*


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## Antipathy (Feb 7, 2019)

Clearly this dumbass never heard about backing up his files.


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## RG 448 (Feb 7, 2019)

Did they try 123456?


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## ApatheticViewer (Feb 7, 2019)

When people say crypto is super secure


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## NOT Sword Fighter Super (Feb 7, 2019)

This is when Black Mirror would come in handy.


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## frozenrunner (Feb 7, 2019)

ApatheticViewer said:


> When people say crypto is super secure


It _is_ secure. So secure this shit can happen.


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## not william stenchever (Feb 7, 2019)

When your shit is so secure that it would take Intel agencies weeks to break into your dead ass's crypto wallet


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## Some JERK (Feb 7, 2019)

https://kiwifarms.net/threads/crypt...ut-of-190m-after-exchange-founder-dies.53001/


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## TowinKarz (Feb 7, 2019)

User id: Admin
Password: Admin


Bet it works....


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## Pargon (Feb 7, 2019)

RIP Null's retirement.


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## WW 635 (Feb 7, 2019)

Some JERK said:


> https://kiwifarms.net/threads/crypt...ut-of-190m-after-exchange-founder-dies.53001/


Posted in a place on this forum that's as obscure as the CEO's password


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## CrunkLord420 (Feb 8, 2019)

Cricket said:


> Posted in a place on this forum that's as obscure as the CEO's password


One day KF will be known as the premier cryptocurrency forum.


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## Grog (Feb 10, 2019)

Leaving your coins on the exchange is like buying something and then leaving it on the counter.


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## St Michael (Feb 10, 2019)

Sucks that some boys are out 190 million but at least my crypto is worth a little bit more now.


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## Humba Wumba (Feb 19, 2019)

"Cotten, 30, died in India last December from complications from Crohn’s disease, according to the company. He was in India “opening an orphanage to provide a home and safe refuge for children in need”.

Haha lowcows that molest kids will live to 90


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## Cantra (Mar 5, 2019)

Looks like they've managed to access the wallets now? But...








						Mystery as millions in crypto-cash lost
					

Cyber-investigators are trying to find out what happened to millions in crypto-cash.




					www.bbc.co.uk
				






> Efforts to recover millions in crypto-cash from the digital wallets of a man who died without revealing passwords to access them have hit a snag.
> 
> *The wallets have been found to be empty.*
> 
> ...



Oops


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## moocow (Mar 5, 2019)

Cantra said:


> Oops


kek ... exit scam.

Every. Fucking. Time.

Sorry for your loss.


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## Maggots on a Train v2 (Mar 8, 2019)

You know what I don't believe?
>He was in India “opening an orphanage to provide a home and safe refuge for children in need”. 
That.  Crypto generally attracts neckbeards, not humanitarians.  The trip had to be some kind of front for some other purpose, but he keeled over before he got it done.  Reddit has a pic of the orphanage, it at least exists.


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## error (Mar 17, 2019)

ApatheticViewer said:


> When people say crypto is super secure
> 
> 
> ?



To put this simply, there are more Bitcoin keys than all the grains of sand on Earth.
To bruteforce an address takes immense amounts of computing power. They are gonna have to wait for quantum computers to get their funds back.


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## Varg Did Nothing Wrong (Mar 17, 2019)

> guy "dies" in "India"
> 150 million dollars goes missing around the same time



Really makes you think. I'm sure you could pay off some officials to fake a death certificate for you for a fraction of 150 million USD in India.


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## Terrorist (Mar 18, 2019)

I hope you guys are all millionaire angel investors with cash to burn bc lol if your hopes and dreams are riding on this shit


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## Pope Negro Joe the XIIIth (Mar 18, 2019)

I generally dislike Reddit, but I'll always love /r/Buttcoin's default response to this shit whenever it happens: 

Sorry for your loss.


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## error (Mar 26, 2019)

Terrorist said:


> I hope you guys are all millionaire angel investors with cash to burn bc lol if your hopes and dreams are riding on this shit



Lol, Bitcoin OG since 2011. Bought at 2.12
Bitcoin WILL break $100k. Sorry you missed the train


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## Chexxchunk (Mar 27, 2019)

error said:


> Lol, Bitcoin OG since 2011. Bought at 2.12
> Bitcoin WILL break $100k. Sorry you missed the train


I'd have cashed out as soon as I could live off the interest and never thought about money again.
Hell, if I was that rich, I'd probably just go full Howard Hughes and just disconnect from reality completely.


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## MrTickles (May 20, 2019)

$190m just sitting there, never to be seen again. 

Damn.


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## CrunkLord420 (May 20, 2019)

MrTickles said:


> $190m just sitting there, never to be seen again.
> 
> Damn.


To this date the cold wallet addresses have not been made public, we don't know for certain that the money wasn't gambled away prior to his death. It's frankly unacceptable that those addresses have not been made public so actual technical people can monitor the situation, unlike the boomers appointed by the courts who ended up losing an addition million dollars by sending some hot-wallet coins to the wrong address.

Also the $190m USD valuation is probably more like $300+ million since the bull market, as the implosion happened in the depths of the bear market.


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## TwinkLover6969 (Dec 2, 2019)

The internet is fucked


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## Harnessed Carcass (Dec 2, 2019)

Fucking mars


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## Thumb Butler (Dec 2, 2019)

TwinkLover6969 said:


> The internet is fucked



Things have indeed turned to shit in the last decade.


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## Arctic Fox (Dec 2, 2019)

Somalia. They give zero shits.


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## Kacho (Dec 2, 2019)

I'm sure our great allies in Israel would provide Null with secure hosting.


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## energ1a (Dec 2, 2019)

Arctic Fox said:


> Somalia. They give zero shits.


I'd imagine there would be beyond shit tier internet and intermittent/non existent electricity.

I'm vouching for Hungary, they have cheap electricity, great internet, non cucked government (but EU unfortunately), no hate speech laws and no internet surveillance/censorship. 



Harnessed Carcass said:


> Fucking mars


Maybe one day we can base our servers in low earth orbit


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## ⠠⠠⠅⠑⠋⠋⠁⠇⠎ ⠠⠠⠊⠎ ⠠⠠⠁ ⠠⠠⠋⠁⠛ (Dec 17, 2019)

Bitcoiners, especially Canadian Bitcoiners, may be interested in this article from Vanity Fair, about the incredibly dodgy operation that was Quadriga. Amazingly, they got some approval from Canadian finance authorities and even tried to go public while not actually having an accounting system beyond Excel sheets on the boss's laptop. For $250 million in deposits and billions of dollars in trading traffic.

There is a podcast on this here, which goes into more details on some things, though I recommend reading both
https://www.whatbitcoindid.com/podcast/quadriga-what-happened-to-gerald-cotten-with-nathaniel-rich

There are some open questions from the podcast- the author of the article talks about Quadriga's whole system being run on tickets as if this is bad. A manual trading system isn't necessarily unviable if there are sufficient staff to execute trades during trading hours and tickets are satisfied fast, but it is suggested in the interview with Rich that the main criteria for 'ticket priority' near the end was whether people were complaining on social media.

The body of Gerald Cotten, Quadriga's CEO, is now being exhumed to see if he actually died in India or just ran an elaborate exit scam.


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## CrunkLord420 (Dec 17, 2019)

3119967d0c said:


> Bitcoiners, especially Canadian Bitcoiners, may be interested in this article from Vanity Fair, about the incredibly dodgy operation that was Quadriga. Amazingly, they got some approval from Canadian finance authorities and even tried to go public while not actually having an accounting system beyond Excel sheets on the boss's laptop. For $250 million in deposits and billions of dollars in trading traffic.
> 
> There is a podcast on this here, which goes into more details on some things, though I recommend reading both
> https://www.whatbitcoindid.com/podcast/quadriga-what-happened-to-gerald-cotten-with-nathaniel-rich
> ...


People were screaming for DNA verification and pictures of the body when this was fresh, it's funny that they waited all this time to do it.

It wasn't an exit scam, Gerald embezzled the money and lost it to bad trades on other exchanges. If anything he's dodging criminal charges, but financial crimes might not be something to fake your death over when there's nothing to get away with. His supposed widow had her net worth stripped down to about $100k to avoid charges being placed on her for probably actually knowing about this shit despite claiming otherwise.


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## ⠠⠠⠅⠑⠋⠋⠁⠇⠎ ⠠⠠⠊⠎ ⠠⠠⠁ ⠠⠠⠋⠁⠛ (Dec 17, 2019)

CrunkLord420 said:


> People were screaming for DNA verification and pictures of the body when this was fresh, it's funny that they waited all this time to do it.
> 
> It wasn't an exit scam, Gerald embezzled the money and lost it to bad trades on other exchanges. If anything he's dodging criminal charges, but financial crimes might not be something to fake your death over when there's nothing to get away with. His supposed widow had her net worth stripped down to about $100k to avoid charges being placed on her for probably actually knowing about this shit despite claiming otherwise.


I think there are interesting questions raised about just how much he lost. I'd suggest checking the article and podcast out.

I understand why certain things, like the fact that withdrawers were having BTC fulfilled from depositor amounts, makes it look like he lost it all. And the fact that he never kept any real accounts does make that easier to believe.

But the question Rich raises is this.. we know about Cotton losing a few tens of millions. Maybe his crook partner wasted some more. But he had hundreds of millions to work with. Did he really manage to engage in dodgy short deals or similar high risk trades so badly that he lost an order of magnitude more than his known losses?

Some of his trades were apparently in shitcoins like ZCash, where he could have been 'losing' money to himself. He could have bought every ZCash token in existence with the sort of BTC he had.


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