B.C. seeks to seize gold, jewelry in crypto case

B.C. provincial officials in Canada are trying to force the surviving co-founder of defunct crypto exchange Quadrigacx to explain how he came by a cash hoard, 45 gold bars and jewelry including a diamond-studded Rolex.

The Director of Civil Forfeiture in British Columbia on Wednesday sought a court order to compel Michael Patryn to detail how the seized assets — including $250,200 in cash — were acquired.

An official probe in 2020 concluded that the exchange’s collapse was the result of fraud by its other founder Gerry Cotten, who died unexpectedly in 2018 at age 30 while on honeymoon in India.

The investigation said evidence indicated Patryn ceased to be associated with Quadrigacx after 2016, before most client funds were deposited with the exchange and then lost.

Wednesday’s filing cites chat records obtained by investigators between Cotten and Patryn from 2014 and 2015, in which they appear to discuss stealing customer funds and staging Patryn’s public exit from the exchange while remaining involved privately.

Patryn, who was once known as Omar Dhanani, changed his name twice following past criminal charges, Bloomberg News reported in 2019.

‘APPROPRIATING FUNDS’

The chat records show the two men “were discussing appropriating funds from Quadriga as early as 2014,” according to the filing.

In an earlier filing, a lawyer for Patryn in October said the cash hoard, watches and jewelry aren’t linked to unlawful activity. The lawyer declined to comment about the latest court application, which will be heard by a judge on April 30.

The Royal Canadian Mounted Police seized the assets from a Canadian Imperial Bank of Commerce safety deposit box in Vancouver in June 2021, after the trading platform’s collapse. A civil forfeiture claim was filed by British Columbia in the province’s Supreme Court in 2023.

The latest step by the Director of Civil Forfeiture is only the third such unexplained wealth order application in British Columbia, which implemented the power last year to tackle money laundering and organized crime.

If Patryn is unable to show the assets in question were legitimately acquired, the case could ultimately lead to him forfeiting them. The order’s proceeds are earmarked for donations to crime victims and crime prevention services, according to a statement from the province’s Solicitor General Mike Farnworth.

The Quadrigacx scandal sparked global interest, including a 2022 Netflix documentary called Trust No One: The Hunt for the Crypto King.