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.

Related news

Judge Appoints 2 Law Firms to Represent Quadrigacx Clients

Two law firms have been appointed to represent the clients of insolvent Canadian crypto exchange Quadrigacx in court. The number of affected users has been estimated at approximately 115,000 and lawyers will have to contact as many as they can. The digital asset trading platform owes them approximately $190 million. Also read: Hacked NZ Exchange Cryptopia Allowed to Reopen Miller Thomson, Cox & Palmer to Reach Affected Users Nova Scotia Supreme Court Justice Michael Wood issued a decision on Tuesday, Feb. 19, announcing the appointment of Toronto-based Miller Thomson and Cox & Palmer from Halifax as representatives of Quadrigacx’s clients. Both firms have extensive experience with insolvency cases, Wood said, quoted by the Canadian Press. He added that Miller Thomson has cryptocurrency-related expertise as well. It was announced that the law firms have agreed to cap their fees at this stage of the court proceedings. However, the exact fees are not mentioned in Michael Wood’s decision. The judge also approved their communication strategy. The legal teams of the two companies plan to use social media channels and online discussion groups to reach as many affected users as possible. The appointment of Miller Thomson and Cox & Palmer comes after the court accepted applications from four law firms, each representing the interests of more than 100 clients, CBC reported. The competing motions have been received since the initial creditor protection hearing on Feb. 5. The plaintiffs are owed approximately 250 million Canadian dollars (around $190 million). Varied Interests of Creditors Deemed a Challenge Quadrigacx, which is operated by the Vancouver-based company Quadriga Fintech Solutions Corp., was shut down at the end of January. Court documents suggest the platform lost access to as much as $190 million of cryptocurrency after the death of its CEO, 30-year-old Gerald Cotten. The founder of the exchange died on Dec. 9, 2018 in India due to complications from Crohn’s disease. It’s been established so far that the digital money is held in offline cold wallets and Cotten is believed to be the only person who had access to the coins. After Quadriga filed for creditor protection, the court appointed a monitor – Ernst & Young Inc. In a report to the court, the company revealed that just after its appointment the exchange team “inadvertently transferred” an additional 103 BTC to cold wallets which Quadrigacx is unable to access. Affected parties can now seek to have a committee of creditors and legal counsel to represent them. According to Judge Michael Wood, the varied interests of the different creditors are a major challenge in the court case. “The business is currently suspended and may never resume, although that remains to be determined,” he wrote in his decision. What are your expectations on future developments in the Quadrigacx case? Share your thoughts on the subject in the comments section below. Images courtesy of Shutterstock. At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more. The post Judge Appoints 2 Law Firms to Represent Quadrigacx Clients appeared first on Bitcoin News.
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QuadrigaCX customers are still looking for their money; a portion might have gone missing

Ever since QuadrigaCX CEO Gerald Cotten died, clients have been trying to get their money back. The company even claimed to have opened a teller window in Laval for those who wished to withdraw cash—however, the system stopped functioning as Quadriga filed for bankruptcy, WSJ reports.The post QuadrigaCX customers are still looking for their money; a portion might have gone missing appeared first on The Block.
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