QuadrigaCX Goes to Court for Creditor Protection Over Inaccessible Funds

QuadrigaCX Goes to Court for Creditor Protection Over Inaccessible Funds

The story continues. As Gerald Cotten, Co-Founder of crypto exchange QuadrigaCX, is the only person allegedly said to hold the keys for the exchange’s cold wallet, his sudden death made inaccessible its $137 mln worth of crypto. The exchange heads to court appealing for creditor protection

The hearing is set today, 5 February 2019, in the Canadian province of Nova Scotia, as a consequence of not having the key to access its digital wallet holding $137 mln worth of bitcoins and altcoins. For this reason, QuadrigaCX is asking the Nova Scotia Supreme Court for creditor protection citing its inability to pay 115,000 users and in order to preempt lawsuits in the interim as the exchange is looking for ways to solve the issue.

Ernst & Young, a London-headquartered professional services firm, was sought by QuadrigaCX to supervise the proceedings. They will join the exchange for today’s hearing. [Ernst and Young cites the exchange owes 92,000 of its users versus the exchange’s calculation of 115,000 users.]

Ernst & Young Recommendations

Subsequent to their discussion with QuadrigaCX, an initial report was submitted by Ernst & Young. According to the document gathered by CoinDesk, the exchange is said to be ‘experiencing a liquidity crisis’ and is incapable of meeting user withdrawal requests. The exchange couldn’t ‘locate a significant amount of cryptocurrency’ after the death of its CEO and Co-Founder, Gerald Cotten.

The exchange is advised by Ernst & Young to retain its website suspension and obtain creditor protection covered by the Canadian Companies’ Creditors Arrangement Act. Under this protection, a thorough investigation of the exchange, to ascertain which assets can be distributed, can be done.

If the court allows QuadrigaCX the creditor protection it is seeking, it plans to operate until 28 April 2019.

Reclaiming the Funds

The Ernst & Young report states that cash held by QuadrigaCX by means of bank drafts, and cryptocurrency and fiat kept in third-parties can be recovered immediately. Another source of funds may come from selling the trading platform QCX, which is reportedly ‘a saleable asset of considerable value.’

After funds from the above proposition are liquidated, cryptocurrency forensics will be applied to determine and to access the digital wallet.

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