Man lost $500,000 life savings in crypto exchange ‘scam’ after trader ‘died with password to funds’

Tong Zou tries to avoid thinking about the amount of money he has lost.

The 33-year-old had his life savings wiped out when a cryptocurrency exchange went disastrously wrong for him.

“It just makes me more depressed about it,” he tells Sky News.

“I could have invested it in real estate. I could have put it in stocks.

“So far, nothing’s been found. It sucks.”

Mr Zou had trusted his money with Canada’s largest cryptocurrency exchange, Quadriga CX, whose co-founder then died apparently with the password to his clients’ funds.

Gerald Cotten’s mysterious death at the age of 30 left tens of thousands of investors out of pocket and led to speculation that he may still be alive.

It later emerged that Mr Cotten had been operating a Ponzi scheme before his death, with investigators calling it “an old-fashioned fraud wrapped in modern technology”.

The case is now explored in a new Netflix documentary in which Mr Zou appears, after he lost about 500,000 Canadian dollars (£306,000) – including $200,000 gifted to him by his parents.

“A lot of people want to blame just me for this,” he says.

“Yeah I deserve some of the blame because it’s irresponsible. I should have done more research.

“It’s also the unluckiness, the timing. How could I know?”

‘I guess I trusted them a lot’

Mr Zou had racked up large debts in 2018 after taking out $80,000 in loans to buy Bitcoin before the value of the cryptocurrency crashed that year.

The software engineer decided to sell his San Francisco apartment to clear his debt and planned to move to Vancouver.

He needed to transfer his 400,000 US dollars to his Canadian account but wanted to avoid bank commission charges.

“I was thinking of alternative ways to do it where I could save myself some money,” he says.

Mr Zou insists he had used other cryptocurrency exchanges successfully in the past and he knew friends who had used Quadriga.

“I guess I trusted (Quadriga) a lot,” he adds.

“I did some research on Reddit. They said: ‘Oh it’s going to take a while but you always get your money. It’s not a scam’.”

Mr Zou bought Bitcoin with his money before selling the cryptocurrency on Quadriga, expecting 500,000 Canadian dollars to be transferred to his Canadian bank account.

But three months later, there was still no sign of the money.

‘I couldn’t get any sleep’

After repeatedly emailing Quadriga, he says the company blamed the delay on a legal battle it was having with a bank.

“I kept asking them: Where’s my money? – October, November, December – during all that time,” he says.

“They kept saying it was the lawsuit.

“I couldn’t get any sleep. I just prayed. I really prayed it wasn’t a scam.

“My parents were worried about it too.

“At that time, there was nothing I could do. There was no way of getting my money back.

“Once I deposited it, it was basically gone.”

He added: “It turned out to be a scam.”

Mr Zou said that while his mother was sympathetic towards him, he did not tell his father who only learnt about the lost money when his son appeared on the news.

Asked about his father’s reaction, Mr Zou replied: “We try to avoid talking about it.”

The mystery of crypto trader Gerald Cotten

The death of Quadriga CX chief executive Gerald Cotten was announced in January 2019
The 30-year-old died “due to complications with Crohn’s disease” while travelling in India the previous month, his wife Jennifer Robertson said
Following his death, Quadriga said it could not repay $190m (£110m) to clients because Mr Cotten had died with the password to access the funds
Ms Robertson said her husband held “sole responsibility for handling the funds and coins” and no other members of the team could access the stored funds
She claimed she had her husband’s laptop but did not know the password and a technical expert they hired had not been able to bypass its encryption
Auditors, who were brought in to help recover the cryptocurrency, managed to gain access to Mr Cotten’s laptop, but discovered that the digital wallets held there had been emptied in April 2018 – eight months before his death
A regulator found that, facing losses when the price of crypto assets changed, Mr Cotten covered the ensuing shortfall with other clients’ deposits
Ms Robertson reportedly said she was “upset and disappointed” to learn about the extent of the fraud at her husband’s company and insisted she wasn’t aware or involved

Asked if he believed Mr Cotten was dead, Mr Zou replied: “That’s my belief, that’s not everyone’s belief.

“I’m about 80% certain he’s dead.

“If there was any time to fake his death, it would have been in late 2017 when (the value of cryptocurrency) was really high.

“The timing didn’t make sense to me.”

Mr Cotten’s widow Jennifer Robertson – who has denied any knowledge of her husband’s wrongdoing – has since spoken of receiving threats from online cryptocurrency communities.

Some 76,000 investors collectively lost at least 169 million Canadian dollars from the collapse of Quadriga in 2019, a regulator found.

About $115m of that was due to Mr Cotten’s fraudulent trading, it said.

Mr Zou is now involved in a lawsuit seeking to retrieve money for those who lost funds with Quadriga but he said there had been no significant updates since 2020.

He says he hopes the new Netflix documentary will mean “maybe they can move their asses and do something about it”.

“I want to share my story so it doesn’t happen to other people,” he adds.

Mr Zou, who is currently living in a rented apartment in Vancouver, says he is now “pretty much got out of crypto”.

“I have like a little bit,” he says.

“I don’t have that much – I guess just to say I still have something in there but I’m not paying attention to it.

“I’m not sure how important crypto is going to be in the future but it will be there.”

Trust No One: The Hunt For The Crypto King is now available to stream on Netflix.