BC Wants Co-Founder of Failed Crypto Firm QuadrigaCX to Explain Wealth

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BC wants a co-founder of failed cryptocurrency company QuadrigaCX to explain the source of funds used to obtain cash, gold bars, jewelry and luxury watches.

In its third unexplained wealth warrant case, the province is targeting more than $600,000 in assets of Michael Patryn, which were seized by the RCMP in 2021 from a safe deposit box at a CIBC branch in Vancouver.

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The province alleges that cash, gold, jewelery and watches, including Rolexes, are linked to the fraud involving QuadrigaCX. It is estimated that thousands of people who owned cryptocurrencies lost a total of at least $169 million.

A filing from the province on Wednesday adds the so-called unexplained wealth order to a case filed in British Columbia’s Supreme Court in June 2023 seeking to have all assets forfeited as proceeds of illegal activities.

The BC NDP government introduced new measures last year to combat money laundering that include unexplained wealth orders. If successful in court, the orders place the reverse onus on the person to explain where the money to buy their assets came from in cases where there is suspicion of a crime.

“Gold bullion can be very liquid and flashy luxury items such as jewelry and Rolex watches attract attention, but they are also attracting the attention of the police and our government. If they are the product of criminal activity such as fraud, drug trafficking or money laundering, we will pursue them,” British Columbia Public Safety Minister Mike Farnworth said in a statement Wednesday.

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In a response filed last October to the forfeiture case, Patryn (also known as Michael Dhanani, Omar Dhanani and Omar Patryn) said the cash, gold, watches and jewelry are not the proceeds of illegal activities. Patryn’s last known location was Thailand, according to the forfeiture case.

Previously, only the other co-founder of the QuadrigaCX company, Gerald Cotten, who died suddenly in India in 2018was accused of having profited while his clients in Canada and other countries lost millions.

Under British Columbia’s new law, unexplained wealth orders must be sought on a case-by-case basis through the courts and meet certain tests. If successful, information from the warrants can be used to pursue cases where the province seeks to seize assets or money.

The orders have received criticism, including from the BC Civil Liberties Association, which has argued that such measures undermine constitutional rights, have not been adequately tested and would be costly to implement.

A report from 2020 from the Ontario Securities Commissionwhich did not lead to charges, concluded that in the QuadrigaCX case, only Cotten committed fraud.

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Ontario’s financial markets regulator said evidence indicated Patryn had ceased to be associated with QuadrigaCX after 2016 and that the majority of client funds were deposited after his departure.

But in the civil forfeiture case filed in British Columbia court last year, the province alleged that an RCMP investigation determined that Patryn and Cotten took possession of client assets held by QuadrigaCX for their personal use and benefit. financial, including, in the case of Patryn, to purchase, acquire and maintain the safe deposit box and its contents.

Lovie Horner, Patryn’s common-law spouse, was among those who deposited money into the bank account between 2014 and 2020, according to the forfeiture case.

The province has already filed unexplained wealth orders in two other forfeiture cases, seeking, in one case, for the owners to explain the source of $1 million used to purchase a home on Salt Spring Island in 2017. In that case, the owners denied having acted badly. and a person identified as a homeowner has questioned the constitutionality of the unexplained wealth order.

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In 2005, Patryn was convicted in the United States of conspiracy to transfer identification documents in connection with an online money laundering service under his former name, Omar Dhanani.

After his 18-month prison sentence, he was deported to Canada.

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