Trust No One: The Hunt for the Crypto King—more proof that ‘crypto’ is a crime-ridden cesspit

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Trust No One: The Hunt for the Crypto King is the latest digital currency-themed documentary to take Netflix by storm. It tracks the life of Gerald Cotten, the founder of QuadrigaCX, and tries to discover whether he faked his own death in India, disappearing with hundreds of millions in customers’ funds forever.

The release of this documentary was timely (early 2022) as the digital currency markets melted down and several similar stories emerged, leaving a similar trail of destruction in their wake. In this article, I’ll cover the basic storyline of what happened and what I learned from it.

Note: This article contains spoilers. If you intend to watch Trust No One: The Hunt for the Missing Crypto King, do so first.

What happened to Gerry Cotten and QuadrigaCX?

Gerry Cotten was an early Bitcoiner from Canada. He founded one of the most popular Canadian digital currency exchanges, QuadrigaCX, in 2013. In 2018, during the digital currency market meltdown, the exchange stopped honoring withdrawals, and shortly thereafter, Cotten’s partner announced that he had died suddenly in India.

In a tale that’s becoming all too familiar in today’s digital currency industry, QuadrigaCX users lost hundreds of millions of dollars. They had virtually no legal recourse to get their money back. The documentary follows a series of events focusing on the real people impacted by it, woven together with a gripping storyline about the deceptive life of Cotten himself.

The story the victims tell should sound familiar: after receiving email after email denying that there was any serious problem, they were suddenly told that there was a liquidity problem, and further communication ceased (sound familiar?). Eventually, Jennifer Robertson, Cotten’s fiance, publicly announced that he had died in India due to complications related to Crohn’s Disease.

Spoiler alert: In the end, rather anticlimactically, the general conclusion drawn is that Cotten really did pass away in India and that he hadn’t left the private keys of Quadriga’s wallets with anyone who could recover the funds. However, blockchain analysis showed that he had moved hundreds of millions of users’ funds off the exchange and onto others, where he had proceeded to gamble them away in a series of bad trades.

While Netflix mostly focused on the mystery of whether or not Cotten had faked his own death to escape with the money, I found the personal stories of the users whose lives had been ruined by his reckless behavior much more gripping. Perhaps that’s because, right now, so many similar stores are occurring.

Letters to the judge in the Celsius bankruptcy case are being published on the case website and they make for some interesting/upsetting reading. https://t.co/vtqZHCeqQn

Some excerpts: 🧵

— Molly White (@molly0xFFF) July 21, 2022

This thread makes for tough reading. This is the real price of the fraud, lies, and manipulation at the heart of the digital currency markets. Behind every trade is a real person with hopes, dreams, and financial needs.

Another example of the deviousness of the digital currency markets’ key players

While it turns out that Gerry Cotten didn’t do anything as dramatic as fake his own death and make himself unrecognizable via facial reconstructive surgery (he was no Ruja Ignatova), he still did something disgraceful; he abused the trust of his loyal customers, stole hundreds of millions from them, recklessly gambled it all away, and lied about it for months before leaving them in the lurch.

Those who follow events in the digital currency markets today are probably nodding knowingly at this. In just the last few months, we’ve seen plenty of similar stories as Do Kwon’s TerraUSD depegged from the dollar and went into a death spiral, Three Arrows Capital blew up after borrowing billions in bad faith, and both Voyager Digital and Celsius network suspended withdrawals after faking that everything was fine for weeks.

Just as happened with QuadrigaCX, the lives of countless innocent people who did nothing more than trust the predators behind these schemes were turned upside down as they faced shattered dreams and financial ruin.

Trust No One: The lesson at the heart of ‘crypto’

Netflix undoubtedly picked the title for this documentary based on the activities of Gerry Cotten. However, it could and should serve as the mantra of the entire digital currency industry. 

As Dr. Craig Wright has said, it’s snakes and vipers all the way down, and the calls to “democratize finance” and liberate the everyday man and woman from the regulators trying to keep them down are nothing more than the siren calls of conmen who want to be able to operate without regulatory oversight.

If this documentary and unfortunate but inevitable events that have befallen the industry recently can teach us anything, it’s that those calling for regulators to stay out of the industry altogether are either naive idealists or outright frauds.

While light-touch regulations are always best, no regulations only lead to theft, chaos, and stagnation as the cons increase and the big players stay well away for fear of reputational risk. In short, the current industry is anarchy writ large, and it has to change if it is going to deliver any real value or technological innovation.

Many would argue that Gerry Cotten got what was coming to him when he drew his last breath in India. I think it’s high-time Alex Mashinsky, Paolo Ardoino, Do Kwon, and the rest get what’s coming to them.

Key takeaways—what I learned from this Netflix documentary

• Nobody in the digital currency markets can be trusted. Even seemingly nice guys like Gerry Cotten can be devious.
• Users must have a legal mechanism to recover large amounts of money that have been stolen from them. Using the legal system to recover funds is a good thing. We should wish Dr. Wright luck in proving it can be done.
• Wallets containing large sums should be KYC-checked and identified. If they had been earlier, Gerry Cotten’s large withdrawals likely would have been discovered and questioned much earlier.
• There are still several large scams in the digital currency markets, which are probably much bigger than what Gerry Cotten did. As these come to light, the perpetrators must face justice. Maximum sentences for fraud should be applied to send a message.
• Regulation is a good thing when done right. While it can be harmful to innovation if overbearing when taken too far, asking exchanges to keep real dollars in federally-insured banks to cover customer deposits, and forcing them to prove it, harms nobody. Only those with sinister intentions are against such common-sense rules.

Watch: The BSV Global Blockchain Convention panel, Law & Order: Regulatory Compliance for Blockchain & Digital Assets

https://www.youtube.com/watch?v=R58jiNcC5mA