Crypto Enforcement | April 1, 2024

Image: Unsplash/Anne Nygård

BC’s Director of Civil Forfeiture has secured an interim preservation order against assets associated with Michael Patryn, co-founder of defunct QuadrigaCX

The court order is part of ongoing efforts to address the fallout from one of Canada’s largest cryptocurrency scams, and aims to seize $250,000 of co-founder Michael Patryn’s assets (also known as Michael Dhanani and Omar Patryn) believed to be proceeds of the fraudulent activities that led to QuadrigaCX’s collapse following the death of its other co-founder, Gerald Cotten. The exchange’s collapse left creditors out approximately $215 million, with only $46 million recovered by the bankruptcy trustee. The Ontario Securities Commission (OSC) later determined that Quadriga operated like a Ponzi scheme, primarily implicating Cotten in the fraud.

See:  QuadrigaCX: A Review by Staff of the Ontario Securities Commission

• Justice Ahmad of the Supreme Court of British Columbia has granted a preservation order for assets including $250,000 in cash, 45 gold bars, luxury watches, and jewelry found in a Vancouver safety deposit box, alongside funds in a specific CIBC bank account, all linked to Patryn.
• The court found sufficient evidence linking the seized assets to QuadrigaCX’s fraudulent operations, which were exposed following co-founder Gerald Cotten’s death in 2018. The judgment detailed the RCMP’s investigation findings, including chat records between Patryn and Cotten that suggested Patryn’s involvement in Quadriga’s fraudulent activities, despite his departure from the company in 2016.  The court also considered whether granting the preservation order would be against the interests of justice, concluding that it would not, given the purposes of the Civil Forfeiture Act (CFA) and the interests of Quadriga’s creditors.
• The judgment allows Patryn or any interested party the opportunity to challenge the preservation order, provided they notify the Director of Civil Forfeiture eight business days in advance. This provision ensures fairness in the legal process, allowing for the presentation of additional evidence or arguments against the forfeiture of assets.
• With no criminal charges laid against Patryn as of the judgment date, the case remains active within the legal system, with the potential for further developments, including challenges to the preservation order, additional evidence submissions, and eventual decisions regarding the forfeiture of the preserved assets.

See:  Calgary Police and Chainanalysis Launch the Western Canada Cryptocurrency Investigations Centre

Conclusion

By leveraging civil forfeiture laws against Michael Patryn, the province of British Columbia seeks to provide some measure of justice to the victims of the QuadricaCX ponzi fraud and sets a precedent for regulatory and legal frameworks.

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• Source: https://ncfacanada.org/bc-court-freezes-250k-of-quadrigacx-co-founders-assets/