B.C. wins forfeiture of $1 million in cash, gold linked to failed cryptocurrency company QuadrigaCX

The province has won a default judgment valued at more than $1 million for cash, gold, watches and jewelry linked to a failed cryptocurrency company in which investors lost at least $169 million.

The Vancouver-based cryptocurrency firm QuadrigaCX was believed to be the largest in Canada when it collapsed in 2019, leaving more than 76,000 customers missing their funds. 

The firm was co-founded by Gerald Cotten and Michael Patryn. Cotten died suddenly in December 2018 while visiting India. The company said at the time Cotten was the only person who knew the security keys and passwords needed to access the funds.

In 2021, the RCMP seized $250,000 in cash, watches and jewelry from a safety deposit box in a CIBC branch in Vancouver belonging to Patryn. At today’s prices, the gold is valued at more than $800,000.

In a civil forfeiture lawsuit launched in 2023, information filed by the province showed the RCMP alleged that Patryn used client money for his own personal use and financial gain, including to “purchase, acquire, and maintain” the safety deposit box and its contents.

In a 2024 response to the forfeiture suit, Patryn said the cash, gold, watches and jewelry were not the proceeds of unlawful activity.

Using a new provincial law meant to thwart money laundering, the province in 2024 filed an application for an order in B.C. Supreme Court to demand Patryn explain how he acquired the contents of the safety deposit box.

A year later, Patryn filed a withdrawal of his response to the allegations and the B.C. Civil Forfeiture office applied this autumn for a judgment for the cash, gold, watches and jewelry.

A recent B.C. Supreme Court order granted the assets to the province.

Besides the cash, the safety deposit box contained three one-kilogram gold bars and 42 smaller gold bars. The box also contained two Rolex Datejust watches, a Chanel J12 Black diamond watch, and a Baume & Mercier men’s Clasima watch. There were also three rings, two cufflinks, one pendant and one necklace.

According to the forfeiture suit, Patryn’s last known location was Thailand.

Lovie Horner, Patryn’s common-law spouse, was among those who deposited money in the bank account between 2014 and 2020, said the province’s forfeiture lawsuit.

Also contained in the safety deposit box was a Ruger 1911 .45 calibre pistol and two magazines loaded with ammunition.

The box also contained a birth certificate, name change certificate, credit cards and cheques in Patryn’s name.

The province alleged that Patryn’s offences included theft and misappropriation of money, fraud, falsifying documents, money laundering, conspiracy, careless storage of a firearm and ammunition, and possession of a firearm for a dangerous purpose.

Investors had been pressing since Cotten’s death to find a way to access their investments.

But an Ontario Securities Commission investigation found the investors’ money was largely gone two years before Cotten died, lost to unsuccessful trades in cryptocurrencies including bitcoin, or taken by Cotten to fund a “lavish” lifestyle.

By 2016, QuadrigaCX had morphed into what was more or less a Ponzi scheme, the Ontario financial regulator said, with new investor funds being used to pay out old investors who made withdrawal requests. 

In Ponzi schemes, named after 1920s fraudster Charles Ponzi, later investors are paid off with earlier investors’ money and not from the profits of any real business. Many investors lose money when the schemes collapse.

Patryn was also known as Michael Dhanani, Omar Dhanani and Omar Patryn.

In 2005, Patryn was convicted in the United States of conspiracy to transfer identification documents in relation to an online money-laundering service under his former name, Omar Dhanani.

After his 18-month jail sentence, he was deported to Canada.

– with files from Postmedia News

ghoekstra@postmedia.com

x.com/gordon_hoekstra

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