By: Sameer Zubairi | 3 min read | 07/02/2019

The Quadriga Debacle Continues

Part 2: The Blame Game
The fall of Quadriga has become infamous. As the dust starts to settle on this once mighty exchange, its demise is one that may be recalled for generations. Quadriga’s downfall had all the excitement of a nail-biting novel, starting from a mysterious death and ending with lost treasure. However, at the end of the day it’s important to retain some perspective and consider that real people were scammed out of millions. Which is why, in the world of Fintech, this event will be treated as a huge warning sign rather than another quirky tale.

Which brings us to the main question, what can we learn from this?

Obviously, the collapse of Quadriga can specifically be pinned down to bad business practices and a severe lack of compliance. However, the bottom line is that the exchange is no longer around and the lost funds are a myth at this point. Clearly, for the crypto community, especially those anticipating mass adoption, there’s more to take away than meets the eye.

Along with how badly Quadriga ran their company, it’s important to note the following:
  • A lawyer associated with the case has revealed that the RCMP will not be investigating the case.
  • There are currently no requirements for cryptocurrency exchanges to use Multi-Signature wallets to house their coins.
  • The status of cryptocurrencies as securities in Canada is still unclear.
  • Regulatory oversight has been prolonged for another year due to the upcoming election among other things.
  • Canada has no federally authorized financial regulator like the SEC in the States.

It’s easy to pin the loss of $250 million on the flaws of cryptocurrency, as being reported by some major news outlets, but that’s like blaming the advent of the internet for all the money being stolen by Nigerian Princes. Which is why a scam should notsolelybe blamed on the scammer or the technology, but also those who were responsible for preventing it. The loss of a quarter of a billion dollars should light a fire under the seats of legislators to get this new world of cryptocurrency under control.

So what is CoinSmart doing differently?

  1. We’re not putting all your coins in one wallet that’s only accessible by one person, because that’s crazy.
  2. We keep accounting records… like any legitimate business on the planet.
  3. We try not to leave our clients in the dark, in fact you can call us at 855.390.2646 and we’ll actually pick up the phone. Call us crazy, but we think that’s important for a financial institution.
  4. We’re backed by TWO Canadian banks, so your money never leaves the country. Pretty wild for a Canadian exchange.
  5. We’re registered with FINTRAC as a money services business, since we’re a money services business.
  6. We vet all the crypto that’s coming through the exchange, since we don’t want to launder money for Walter White.
  7. We follow strict AML and KYC procedures. Our clients can sleep easy since we’ve taken a strong stance on keeping our exchange secure with strict compliance policies.
  8. We only use secure deposit and withdrawal channels, like Interac E-transfer and Bank Wires. Just in case CIBC is waiting to freeze millions of our dollars.

The Takeaway

As regulations are still catching up with crypto, there’s a bit of due diligence required on behalf of the investor. So for those interested in investing in cryptocurrency, or housing their funds with a crypto company, here’s a few things to look out for:
  • Exchanges backed by Canadian banks:Any exchange with a transparent relationship with a bank will have a secure custodian for the CAD they are receiving
  • FINTRAC registration and strict AML policies: FINTRAC is the major regulatory body for Money Service Businesses in Canada and requires strict Anti-Money Laundering compliance.
  • Multi-Signature Wallets: A multi-signature wallet allows access to the funds using multiple private keys, so in case of emergencies, nothing is lost.

Make your first digital currency purchase today