Business

Erik Gibbs

Bankrupt QuadrigaCX exchange forced to pay $1.2 million in legal fees

The QuadrigaCX scandal was one of the largest cryptocurrency embarrassments to have hit Canadian soil. After what started as a sob story – the exchange asserted that its financial woes were caused by banking partners – it was discovered that the millions of dollars reportedly held for users by the platform had most likely been mismanaged. Making things worse, the exchange’s founder and CEO, George Cotten, reportedly died while on a trip to Indonesia and crypto wallets said to hold funds were no longer accessible. When accounting giant Ernst & Young (EY) was brought in to try and sort out the mess, there was a glimmer of hope, but QuadrigaCX was already a sunken ship and its remaining executives, as well as Cotten’s widow were forced to file bankruptcy. Now, a judge has ordered that, somehow, some way, the company to come up with about $1.2 million to cover legal fees.

The fees are designed to reimburse EY for its efforts in trying to save the sinking ship. In addition, the Miller Thomson LLP and Cox & Palmer law firms are to be paid their fair share out of the amount, as well. Both had been acting as QuadrigaCX’s legal counsel upon order this past February by Justice Michael Wood and were charged with “managing communications with users; acting as user liaison for the monitor [Ernst & Young]; advocating for user interests before the court; identify[ing] potential conflicting interest amongst users; and advocating for user privacy.”

According to court documents (in pdf), the courts are hoping to receive feedback from anyone with ties to QuadrigaCX in order to help put the issue to rest. It states, “The aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction outside of Nova Scotia, including the United States, is requested to give effect to this Order and to assist the Applicants, the Monitor and their respective agents in carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to the Applicants and the Monitor, as an officer of this Court, as may be necessary or desirable to give effect to this Order, or to assist the Applicants and the Monitor and their respective agents in carrying out the terms of this Order.”

In addition to the $1.2 million that has to be paid in legal fees, QuadrigaCX is still on the hook to users. There is around $180 million in user funds that are expected to be repaid to approximately 115,000 people that were abused by the exchange; however, none should hold his or her breath and expect to receive any significant compensation.

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