Diving

into WB21—the company holding $9

million of Quadriga money
A “bitcoin friendly” payment processor with a reputation for accepting bank wires
When Quadriga, the largest crypto exchange in Canada, went belly up earlier this year, it
owed its customers $250 million CAD ($190 million USD). Two thirds of those funds are in
the form of cryptocurrency stuck in cold wallets that only the company’s dead CEO Gerald
Cotten held the keys to.
Deleted: and not actually processing them, is sitting on $12
million CAD ($9 million USD) of Quadriga funds.
Deleted: WB21 is not showing any sign of wanting to hand
over those funds either. That has some Quadriga creditors
worried that more of their money has vaporized.

Meanwhile, Ernst and Young (EY), the court-appointed monitor in Quadriga’s Companies’
Creditors Arrangement Act (CCAA), is trying to round up any funds that remain. EY has
contacted nine third-party payment processors that may be holding money on behalf of
Quadriga. Two of them, Billerfy/Costodian and 1009926 BC LTD, are in the process of
signing over $30 million CAD ($23 million USD).

But according to an affidavit filed by Cotten’s widow Jennifer Robertson on January 31,
WB21 has another roughly $9 million CAD and $2.4 million USD “but is refusing to to
release the funds or respond to communications from Quadriga.”

WB21 did not confirm the balances mentioned in the affidavit to be correct. In lieu of
Quadriga’s current legal situation, our compliance team had to restrict the account until the
investigation is completed.

So, who is WB21?

WB21 stands for .” Launched in Switzerland in late 2015, the company touts itself as a Deleted: “web bank 21st century
virtual bank that lets you “streamline” opening up a bank account from 180 countries. But it
is really a payment processor with a that Quadriga got involved with— Deleted: shady past
Deleted: another shady business partner, what are the odds?
In June 2016, WB21 announced that it was accepting bitcoin deposits. Send in your bitcoin,
and WB21 will credit your account in fiat—though it relies on payment service BitPay to
convert the bitcoin to fiat. “The funds are instantly available on the account and can be sent
out by wire transfers or spent with a WB21 debit card,” WB21 says.

. After 10 months of doing business, WB21 claimed it had 1 million customers and that it had Deleted: The startup went on to launch a PR campaign that
sent cross-border payments totaling more than $5.2 billion. consisted of mainly, well, making stuff up

Boasting a $2.2 billion valuation, WB21 also claimed that Gastauer sold Apax Group, a
previous payments business, for $480 million, and that WB21 turned down a $50 million
funding round after Gastauer invested $24 million of his own money.
The Huffington Post and Business Insider all wrote about WB21’s incredible success. Though
to its credit, Business Insider later added it was “unable to independently verify these
numbers.”
In late 2017, WB21 even got itself in the Wall Street Journal after announcing that it was
moving its European head office from London to Berlin after the Brexit vote.
Deleted: Those number don’t really add up, especially when
you consider it took Transferwise, one of the biggest London-
based fintech companies, four years to get a comparable $4.5
billion in transfer money. Also, as Gruenderszene points out,
in September 2016, WB21’s official app had only 100
downloads on Google’s Play Store.
Yet Forbes (wait, did Forbes delete the story? Try this link),
Deleted: Kadhim Shubber at the Financial Times did some
digging and found no evidence of Apax being sold.
Deleted: Yet Forbes (wait, did Forbes delete the story?
Try this link),
How did WB21, a company, manage to get all this outstanding media coverage? Like another Deleted: spewing so many questionable facts and figures
company that we’ve been hearing about lately, the payment processor leveraged the power of
social media. WB21 has a Twitter account with 65,000, , followers. Deleted: mostly fake

Gastauer, a man in his mid-40s who hails from Germany, also appears in an impressive
Youtube video at “Global Banking Award 2018” event in Frankfurt, where he Deleted: an unheard of
apparently won the award. Dressed elegantly in a tux, with a fog machine in the background,
he gives a speech on the future of banking. “How do you come up with an idea like this?,” he
says. “Do you wake up one morning thinking you want to revolutionize an 80 trillion dollar
industry?”

. In October 2018, the U.S. Securities and Exchange Commission (SEC) filed a civil Deleted: But the truth has a way of catching up
lawsuit against Roger Knox, Wintercap S.A et al, and alleging WB21 NA. Inc of aiding and Deleted: revealed
abetting the fraudulent sale of shares by its client Wintercap S.A. in the sum of $165 million Deleted: accusing
USD. Deleted: Gastauer
Deleted: worth of shares in microcap stocks
“In reality, WB21 Group was not a registered bank, and Gastauer’s ‘solution’ was actually a
circumvention of banking regulations designed to disguise his clients’ [ . . .] identities,” the
SEC said.

As it turns out, this was not Gastauer’s first run in with authorities. Writing again for
the Financial Times, Shubber notes:

“In 2010, [Gastauer] was given an 18-month suspended sentence by a court in Switzerland
for commercial fraud and counterfeiting. Around the same time, a British gambling company
sued him in London for allegedly taking millions of pounds from it. He had set up a
payments processor, the company claimed, but kept the payments.”
Shubber goes on to comment:

. Deleted: “The story of Mr Gastauer is not just about alleged

Consumer review website Trustpilot has a long list of people complaining about WB21.
Quadriga customers began having trouble with WB21 about a year ago. They complained on
Reddit that their bank wires were either not coming through or delayed. In response,
Quadriga covered for WB21, blaming the delays on a bank in Poland that it was using:
“We used WB21 for about a week, but the vast majority of delays related to wires comes
from the fact that the intermediary bank that handled CAD wires for the Polish bank cut them
off due to the association with Bitcoin. We had to reissue all of these from other payment
processors, all manually, which has caused delays.”
wrongdoing in the financial markets; it shows how an
accused fraudster might sell himself and his fantastical story
using the modern tools of the internet age.”
In August 2018, “bitcoinjack” wrote of WB21 on Reddit,
“They will accept incoming funds and credit your account but
you will never be able to get it out. They will lie about
outgoing payments until you give up.”
Deleted: In August 2018, “bitcoinjack” wrote of WB21 on
Reddit, “They will accept incoming funds and credit your
account but you will never be able to get it out. They will lie
about outgoing payments until you give up.”
Deleted: that
Deleted: has taken their money and gone silent

Deleted: I reached out to WB21 and Michael Gastauer for

comment. If I hear back, I will update the story.