Netflix’s Crypto King doc shows how far exchange security has come

Crypto King, a new Netflix documentary, takes us through the rise and fall of QuadrigaCX and the theories surrounding the death of its founder, who took QuadrigaCX’s private keys with him to the grave. After Cotten died in 2018, customers lost access to $190 million (USD) of crypto assets. Some of these customers feature in the documentary and describe their experience of losing their funds and the part they played in an online investigation to find out what happened to their money. Featuring testimony from long-standing members of the crypto community, Netflix puts the focus of the doc on theories surrounding Cotten rather than examining Bitcoin and crypto itself. 

Interview subjects describe Cotten as coming across as an affable, geeky guy, but as the film goes on, we see a more complicated picture of the CEO emerge; revealing past involvement with previous exit scams via hacker forums, associations with known criminals and a huge gambling problem funded by customers’ money. Combine these ingredients with a mysterious death overseas in 2018, angry customers who lost money, Cotten’s wife having changed her name three times and a lack of autopsy to rule out foul play, and you have a perfect storm for wild theories. Most of these ideas are presented as text on messaging boards on Reddit and Telegram, where the amateur investigators theorised together that Cotten faked his death, ran off with the money, and could be living under a different name and a different face to this day.

Netflix finds that crime pays

Crypto King follows a recent glut of “conmen” documentaries produced by Netflix, such as The Tinder Swindler, The Puppet Master and The Worst Roommate Ever, all serving as cautionary tales of how manipulators can thrive in the right circumstances. Crypto King shows how someone managed to leverage people’s enthusiasm for Bitcoin and crypto and took advantage of an emerging, unregulated market to defraud users of millions of dollars. Naming Cotten the “Crypto King ” in the title of this film has echoes of Joe Exotic’s “Tiger King” moniker. With Exotic serving a life sentence and Cotten almost certainly dead, Netflix crowning these men as “kings” is almost certainly a tongue-in-cheek jibe.

The film features a forensic accountant that recounts how he traced Cotten’s activity to reveal how he stole users’ crypto, moved it to other exchanges, and attempted to trade against the market during the bull run of 2017. Cotten, as one interviewee explains, was a notoriously bad trader and managed to gamble away most of QuadrigaCX’s crypto before the market took a turn for the worst in early 2018 and customers started asking for their money back en masse. At the end of 2018, Cotten took his ill-fated trip to India.

Is Gerald Cotten really dead?

Journalists from the Globe and Mail were fairly certain Cotten is actually dead after a visit to the hospital in India where a doctor confirmed Cotten’s death. QuadrigaCX customers that lost their crypto still insist that this does not rule out foul play. There was no autopsy of Cotten’s body, adding fuel to the fires of conspiracy and leading some to demand his body be exhumed and examined further. However, one of the contributors to the doc claimed that even this will not be enough, “Even if they exhume the body, they’ll just say it’s not the real body”.

Cotten’s wife, Jennifer Robertson, was his only companion on his trip to India, leading to theories that she was behind his death with a plan to inherit his fortune. Reports that she was “singing and dancing” at his funeral gave more indications that something was afoot, along with three previous name changes. There is no evidence presented for foul play on her part or that she was involved, or had knowledge of, any of Cotten’s misappropriation of customer funds. Robertson is a notable absence from the film but we do get testimony from her sister who insists Robertson is innocent.

One of the most shocking aspects of the whole saga is how legitimate QuadrigaCX came across. Archive footage of Cotten speaking at conferences about QuadrigaCX’s mission is convincing and eerily similar to many other CEO speeches we see from tech startups. In retrospect, allowing Cotten to have full unsupervised access to the exchange’s wallets was a grave error on the part of the company and likely paved the way for many of the checks and balances that exchanges have to operate under to retain customer trust. By the time of Cotten’s death and QuadrigaCX’s dissolution, the exchange reportedly had over 363,000 users, with around 115,000 affected by the scam.

Exchange security and regulation have come a long way since then. Exchanges, such as Luno, use cold storage to keep customer funds safe and secure. Using multi-signature wallets is another important way to prevent single points of failure and is now the industry standard for many crypto exchanges.