The saga of QuadrigaCX Exchange has finally met the expected disastrous end as the Apex Canadian Court, Nova Scotia Supreme has finally declared the firm ‘bankrupt.’
Earlier this year, after the expected sudden death of the CEO of the exchange, Gerald Cotten in India, the cryptocurrencies of the 115,000 users stored in Cotten’s cold wallet were lost forever. According to the Exchange and the wife of the deceased Exchange CEO, Gerald was the sole manager and owner of the cold wallets which held the company and user assets as well.
The Supreme Court has earlier granted creditor protection and appointed Ernst and Young as an independent Monitor to investigate into the funds and assets of the defunct Exchange on Feb 5. Moreover, the Exchange has suspended all operations on January 28 after filing for creditor protection in on 30th of the same month.
What Happens Now?
Reportedly, Cotten had mixed his personal assets with the Exchanges’ assets in his wallets. Moreover, The report also said QuadrigaCX Exchange funds might have been used to buy assets “held outside the corporate entity.”
Ernst and Young had requested the Apex Canadian court to preserve the personal asset of Cotten for investor protection and shut down the Exchange. The Court’s order extends to all assets currently held by Gerald’s widow, Jennifer Robertson as well. Micheal Wood, the judge for the case has prohibited her from selling, transferring or removing any asset. However, she has been given leverage to cover her legal expenses from two bank accounts which are also being monitored.
Post-bankruptcy, Ernst and Young Co. will now have enhanced powers as a monitor and a trustee of the funds of the Exchange under Federal Bankruptcy and Insolvency Act.
Funds Stuck With Payment Processors
According to the reports by Ernst and Young, more than $70 million in user withdrawals is pending with payment processors which include banks and third-party entities. The Monitor, Ernst and Young and the payment processors seemed to have reached an impasse w.r.t to the pending withdrawals.
The Court has ordered the two parties to come up with a joint solution before April 18.
Moreover, the recovery of the rest of the amount estimated around $150 million will be made from the reserved assets of the Exchange and the deceased owner. It reminisce of the Mt. Gox Exchange where the user’s funds were hacked from the Japanese Exchange; only about 30% of the recovery has been made from the total amount of Bitcoins that were initially mangled.
Do you think that Nova Scotia Supreme Court, and Ernst and Young Co. can make a successful recovery of the full amount? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com