Blockchain Analysis Ties 5 Bitcoin Addresses to QuadrigaCX Exchange

Blockchain watchers have identified a group of bitcoin addresses that likely belong to one of the so-called cold wallets of failed crypto exchange QuadrigaCX. The discovery is notable in light of QuadrigaCX's claim that it has been unable to access these wallets - which held the lion's share of the $190 million owed to customers - since the death in December of CEO Gerald Cotten.

Quadriga did not share its cold wallet addresses, driving many researchers to try to trace transactions to determine which wallets these were, as well as whether they truly contained the $136 million in cryptocurrencies, including about $92 million worth of bitcoin, said to be held offline.

Internet sleuths then found a group of addresses that had received multiple small transfers on that date totaling 104.335 bitcoin - nearly the same amount mentioned in the report.

1HyYMMCdCcHnfjwMW2jE4cv9qVkVDFUzVa - received 36.37786282 BTC,1JPtxSGoekZfLQeYAWkbhBhkr2VEDADHZB - received 33.19556316 BTC,1MhgmGaHwLAvvKVyFvy6zy9pRQFXaxwE9M - received 19.54328527 BTC,1ECUQLuioJbFZAQchcZq9pggd4EwcpuANe - received 10.34268585 BTC,1J9Fqc3TicNoy1Y7tgmhQznWrP5AVLXj9R - received 4.87560516 BTC. Further supporting the connection, the first address once received a small amount of bitcoin from 3N8auHdN9rtmHDHqNnXK4eWhfukBAQcve1, the same address that was listed as QuadrigaCX's hot wallet by the exchange's owners in a court affidavit.

Plus, those five addresses had earlier been "Clustered" together, or determined to belong to the same entity, by two blockchain analysis sites, Walletexplorer and OXT. Laurent, a developer at OXT who would not disclose his last name, told CoinDesk he also believes the cluster to be related to QuadrigaCX based on patterns of transactions it sent and received.

In the UTXO model, addresses designate not accounts but transaction outputs, i.e. the parts into which initial amounts of bitcoin are split during transactions.

"These addresses are automatically clustered thanks to a script processing a conservative version of a method called the 'merged inputs heuristic'," Laurent said in explaining how OXT draws connections between addresses.

"In its basic version, the 'merged inputs heuristic' states that all addresses associated to the inputs of a bitcoin transaction are controlled by [the] same entity and should be clustered."

"Experience with the BTC blockchain and popular exchanges shows this is the main collection address of Bitfinex's hot wallet," Decoze wrote.

"My main theory is that it might be a wallet controlled by QCX and used as a kind of 'pivot wallet' between QuadrigaCX hot wallet and several exchanges. Large financial flows can be observed between this wallet and exchanges like Bitfinex," Laurent said.