Furthermore, the researchers found that QuadrigaCX used highly deterministic wallets to manage client funds. These wallets would enable the exchange to generate millions of unique bitcoin wallet addresses from a single, original clustered wallet address. Zerononcense claimed that it had recognized one of such grouped addresses with the help of
WalletExplorer.com, a service which is supposedly good at “address clustering.”
...
Therefore, it is likely that Quadriga was pitting traders’ positions against each other to fulfill deposit/withdrawal requests.
“QuadrigaCX did not have a designated hot or cold wallet to send the customer their funds,” wrote Zerononcense. “In specific, they were forced to aggregate funds from disparate, disorganized locations in order to ensure that the withdrawal was successful.”
Ethereum Cold Wallets Missing Too
Separate research shared by My Crypto CEO and Founder Taylor Monahan revealed a similar case for Ethereum. She shared QuadrigaCX’s three ether wallet addresses. Two of these wallets made huge withdrawals to addresses associated with other top exchanges such as BitFinex, ShapeShift, and Poloneix. Between 2015 and 2017, Quadriga had made withdrawal worth approx $22 million, adjusted according to ETH/USD rate change.