Business

Ed Drake

It’s official: Embattled Canadian exchange QuadrigaCX enters bankruptcy

Canadian cryptocurrency exchange QuadrigaCX has been declared bankrupt following a failed attempt to restructure the firm, the latest development in their high-profile struggles in recent months.

The controversial Canadian platform, which reportedly lost access to hundreds of millions of dollars of client funds, was formally declared bankrupt in a court Nova Scotia following a recommendation from court monitor Ernst & Young, CBC reported.

Restructuring will now proceed under the Bankruptcy and Insolvency Act, rather than the Companies’ Creditors Arrangement Act as originally envisaged. The ruling, petitioned by the professional services firms, now means Ernst & Young will act as trustee, with powers to require documentation and other evidence, including witness testimony.

The ruling was also accompanied by a separate asset preservation order against Jennifer Robertson, the wife of the firm’s ex co-founder, Gerald Cotten, as well as his estate. The order prevents the transfer or sale of any assets currently under their ownership.

The exchange is reported to owe some $195 million to its customers, with around 115,000 people still out of pocket since the death of its founder

Cotten reportedly died while travelling in India, causing widespread concern and sympathy for his family and colleagues at QuadrigaCX. However, suspicions were raised when it was revealed the firm was unable to recovery holdings stored in some cold wallets—because they had no access to the private keys.

Despite pledging to search for the private keys, QuadrigaCX executives have so far been unable to recover the data, effectively locking the holdings and freezing out those who are owed money from the exchange.

The asset preservation order in particular has given cheer to those who remain skeptical about the official line, with a number of online commentators raising questions over the official account of Cotten’s death. The case has gripped the Bitcoin community in recent months, the latest demonstration of the pitfalls of poorly regulated crypto markets.

While doubts over the official account remain, Tuesday’s ruling should ensure the most thorough investigation into the firm’s affairs to date, in a bid to recover money owed to creditors.

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