QuadrigaCX co-founder Michael Patryn allegedly traded large positions on BitMEX

Quick Take

  • A co-founder of QuadrigaCX appears to be linked to reddit user MikeXBT, who frequently posted about making large volume trades on BitMEX
  • MikeXBT posted about taking long and short positions as high as $8 million
  • It is not yet clear how Patryn funded his multi-million dollar trades

Posting history clues strongly suggest a reddit user who frequently posted about making large-volume trades on BitMEX might in fact be Michael Patryn, co-founder of QuadrigaCX.

QuadrigaCX, a Canadian cryptocurrency exchange, ceased operations on Jan. 26, leaving many of its clients confused and panicked. Seven weeks prior, the firm’s CEO and co-founder, Gerald Cotten, suddenly passed away. QuadrigaCX filed an application for creditor protection in the Nova Scotia Supreme Court on Feb. 8, citing issues with locating “very significant cryptocurrency reserves held in cold wallets.”

Michael Patryn’s connection to MikeXBT

Patryn appears to have repeatedly posted on reddit going by the username ‘MikeXBT‘. In MikeXBT’s last public comment posted a month ago, he seemed to confirm that he is a shareholder in QuadrigaCX. He said:

We were invited. It was not mandatory. Most shareholders did not attend.

In another comment posted in February, MikeXBT responded to another user calling him “Mr Patryn.”

In April 2014, MikeXBT was also directly linked to Michael Patryn as one of the candidates running for a slot on the Bitcoin Alliance board. Francis Pouliot posted his information on a public forum in 2014 including his handle ‘MIKE XBT’.

Globe and Mail published a story last week asserting that Michael Patryn’s real name was Omar Dhanani and that he was a “convicted felon who served time in the United States for his role in an online identity-theft ring.” In 2004, when Dhanani was 20 years old, he was arrested by the United States Secret Service for operating an anonymous “electronic money-laundering service.” U.S. court records indicated that Dhanani had an alias of Omar Patryn. He was sentenced to 18 months in federal prison and released in May 2007.

According to Patryn, he had split with QuadrigaCX in 2016, after having a fight with Cotten about taking the company public.

BitMEX positions

The connection between MikeXBT and Michael Patryn could potentially be problematic because the account often posted about taking unusually large positions on BitMEX. Some internet commentators went as far as to accuse Patryn of using some of the QuadrigaCX’s funds to trade.

In one of the comments posted on r/BitcoinMarkets in April 2018, u/MikeXBT said:

Closed my $7m long posted here from $6580, at an average of $6840. A gain of approximately 4%, plus earned a bit in maker fees and perpetual fundings.

In September 2018, MikeXBT posted about taking positions as high as $8 million.

Long $8 MM @ $6646. 1x leverage, soft stops at 5%. I allowed part of my hedge short to expire during the September settlement on Mex, planning to reopen in $500k chunks as the price increases.

MikeXBT didn’t take long positions exclusively though. He also took plenty of short positions such as this one from April 2018.

Added $1MM to my $2MM short @ $8722. Current position $3MM @ $8895. I’m still expecting substantial downward movement, but will consider this trade lost if we break the $9400 range with conviction.

A Twitter account ‘I am Nomad’ also posted what seems to be a list of positions taken by a user ‘Patryn’ on BitMEX.

Evidence certainly points to Patryn having taken some large positions on BitMEX, but what’s still not clear is how exactly he funded his multi-million dollar trades.