News: WB21 rebrands, Patryn is without a doubt Dhanani, and Quadriga creditors now have a committee

What do you do when bad press gets you down? Silly rabbit, you change your name. WB21, the firm that has been holding on to several millions of dollars in Quadriga funds is now Black Banx!

According to the firm’s press release (archive): “WB21 decided to rebrand its corporate image using the more expressive name ‘Black Banx’ to better describe the business activities and the companies [sic] rebel approach in the banking industry.”

(WB21 founder Michael Gastauer has since deleted a tweet about the event.)

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Here is the kicker. Black Banx is registered at The South Quay Building, 189 Marsh Wall, London, England—the same address as WB21. However, the address in the press release is 88 Queens Quay West, Toronto, Ontario.

Wait what? Black Banx has an office in Canada?

I looked up the address on Google. This is a humungous office building. It is also home to Royal Bank of Canada, which is, coincidentally, the bank where Quadriga’s court-appointed monitor Ernst & Young (EY) set up accounts to hold money on behalf of Quadriga creditors. Black Banx is likely using a virtual office or a coworking space in the building. If anyone in the area cares to take a look, let me know.

(Read my Quadriga timeline for a complete history of the Canadian crypto exchange.)

WB21 threatened me with legal action after I wrote about them. I responded by publicizing the emails and documents they sent me in a tweet. Bitcoin advocate Andreas Antonopoulos, who has 473,000 Twitter followers, found my tweet and retweeted it.

That led to few crypto news outlets, such as News BTC and CoinGeek, running stories on the incident, with some added dramatic flair. (The CoinGeek headline actually misses the point a bit and says I’m in a “tussle” with QuadrigaCX.)

Interestingly, I found an old story in Bitcoin Magazine from June 2016 when WB21 first started accepting bitcoin deposits—with the help of BitPay to convert bitcoin to fiat. After the news broke, many bitcoin investors saw WB21 as a way to cash out of their bitcoin.

Former WB21 user Adrian Bye told me, “I’m not in the US, and for me, and many others, getting crypto into fiat is quite complicated, so we have to look into alternative solutions.” He sent $40 worth of bitcoin to WB21 to “test out the system” and never saw that money again.

On the topic of “changing your name,” Bloomberg straight out announced that Quadriga cofounder Michael Patryn is convicted felon Omar Dhanani. Bloomberg tracked down official documents showing two name changes. According to the report, “Patryn changed his name from Omar Dhanani to Omar Patryn with the British Columbia government in March 2003. Five years later, he registered a name change to Michael Patryn in the same Canadian province.”

Combine this new information with the 2005 booking photo of Dhanani the Globe and Mail (archive) pulled up recently, and you have a pretty strong case that Patryn is Dhanani—but I’m sure he still denies it.

Quadriga’s creditors now have official representation. Miller Thomson and Cox & Palmer appointed a seven-person steering committee to help them represent the exchange’s 115,000 creditors. One of the members, Eric Bachour, also lost money in Mt. Gox, the Tokyo-based exchange that collapsed in 2014. He is probably suffering from a horrible case of deja vu right now.

Earlier, I wrote on how Quadriga’s representative Stewart McKelvey (aka “Applicants’ Counsel”) withdrew from the CCAA case. The details were murky based on a statement by the firm. New details have emerged in a letter Miller Thomson (aka “Representative Counsel”) sent to Quadriga creditors. From the letter:

“Representative Counsel sent two letters to Applicants’ Counsel expressing discomfort with the conflicts of interest presented by Stewart McKelvey’s representation of both the Applicants and Ms. Robertson. The Monitor expressed similar concerns. We advised Applicants’ Counsel that, in our view, this represented an irreconcilable conflict that needed to be addressed without delay.”

Basically, there was a “concern” of a potential conflict of interest, because Stewart McKelvey represented both Quadriga in its CCAA case and the estate of Jennifer Robertson, the widow of Quadriga’s dead CEO Gerald Cotten. But there was no evidence of a conflict of interest per se. At least that’s how I read it.

Quadriga creditors are waiting patiently for Ernst & Young to file its fourth monitor report. It has been more than three weeks now. The last report was filed on March 1.

Some Quadriga creditors are wondering how to report their crypto gains and losses in  their tax filings without their Quadriga trading histories. Reddit user “Cyphrus21” who claims to be a CPA, suggested they make a best guess and file an amendment later when the information becomes available. (If it ever becomes available.) He/she notes: “Lastly, Quadriga didn’t become insolvent / delisted until 2019, so you cannot declare your loss on that event until when you file your 2019 tax return in 2020!”

Other exchange-related news  

Last year, I wrote an in-depth article on Binance, the crypto exchange based in Malta, for The Block. I still have a hard time keeping up with CZ’s business schemes. (CZ is the CEO of the exchange.) Recently, Binance announced that it is changing the sale format of Binance Launchpad, its token launch platform, from a “first-come-first-served” to a lottery system based on your BNB holdings.

BNB is Binance’s own Ethereum-based ERC20 token. The exchange has been struggling to create an ecosystem around the coin, and this is really grabbing at straws.

ShapeShift is a non-custodial exchange that lets you swap out one coin for other. Founded in 2013, the exchange did not implement KYC identity checks until late 2018. ShapeShift was upset about a September 2018 WSJ report that claimed the exchange was being used to facilitate money laundering. To clean up its image, ShapeShift asked blockchain analytics firm CipherBlade to repeat the investigation.

I took a look at CipherBlade and found some, well, interesting stuff. Here’s my story: “Blockchain analytics firm CipherBlade steps in to launder ShapeShift’s image.” Shortly after my story went live, Ben Munster covered the topic for DeCrypt. A few days later, David Gerard brought even more CipherBlade details to light in his post.

U.S.-based crypto exchanges are handling 29 percent of bitcoin trading—much more than what was previously thought. That is because overseas exchanges have an abundance of fake volume, according to a report by Bitwise Asset Management, a firm working to create a crypto ETF. According to Bloomberg, this makes the US (home of Coinbase and Kraken) the world’s second-largest domicile for crypto exchanges by trading volume after Malta (home of Binance).

Also interesting

R.I.P. Bitmain’s massive IPO. The bitcoin mining giant filed to list its shares in Hong Kong in September. (I wrote about it for Bitcoin Magazine.) But it appears the fall in the price of bitcoin has taken too big of a toll on the company.

Billionaire venture capitalist Tim Draper, who has a history of defending fallen Theranos CEO Elizabeth Holmes, is in the Theranos documentary. He is wearing a screaming purple bitcoin tie.

A failed ICO is trying to flog itself  on eBay.

Fresh out of 12 years in prison, former Enron CEO Jeffrey Skilling is exploring a new energy project that runs on—you guessed it—a blockchain. Bloomberg’s Matt Levine writes this imaginary conversation:

“Skilling: We are building a platform to connect energy investors and projects.

Investor: Wait isn’t that kind of what you built at Enron?

Skilling: Yes, thanks for remembering!

Investor: Except it was a huge fraud and investors lost all their money and you went to prison for it?

Skilling: Yes but that’s why we’ll put this one on the blockchain.

Investor: Ooh, I love blockchains.

Skilling: The power of crypto is that you don’t have to trust me.

Investor: It’s true, that is how crypto works.

Skilling: Sure I went to prison for fraud, but this has the power of immutable code.

Investor: It’s so immutable!

Skilling: Can I have your money now.

Investor: All of it, here it is.”

(Thanks to Cas Piancey, who first noticed that WB21 rebranded.)

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