If there was any hope of the QuadrigaCX debacle having a happy ending, that hope is beginning to flicker and fade. After the cryptocurrency exchange went virtually belly-up due to a long list of unfortunate activity, the accounting firm hired to try and put everything in order is now throwing in the towel. Ernst and Young (EY) has submitted a proposal to the courts that suggest the company’s restructuring should be move to bankruptcy proceedings.
EY published (in pdf) a report on Tuesday in which the firm indicated that creditors “will benefit” by allowing QuadrigaCX to move forward through bankruptcy instead of a possible restructuring. It explained, “Transitioning from the CCAA [Companies’ Creditors Arrangement Act] to the BIA [Bankruptcy and Insolvency Act] will streamline the administration of the proceedings, reduce the level of professional involvement and provide enhanced investigative powers for the Trustee.”
EY added, “As set out in previous reports of the Monitor, the current objective of these CCAA proceedings is data and asset recovery. Given the present circumstances, the possibility that Quadriga will restructure and emerge from CCAA protection appears remote.”
The accounting firm was appointed by the courts after the remaining executives at the exchange acknowledged in January that they were not able to locate as much as $136 million in crypto. EY has also been overseeing the administration of an order to organize around $54 million that is held by third-party payment processors.
If the company is allowed to file for bankruptcy, EY asserts that it will be able to see valuable assets, eliminate governance issues by removing the company’s directors and chief restructuring officer and would authorize the exchange’s trustee to have more “investigatory powers” without having to seek court orders.
EY states in its report that it could be close to releasing its findings on the exchange’s missing funds. It said it would submit a final report within the next couple of weeks, which would include updates to the court on progress made so far. However, the report did not provide any insight into the whereabouts of the missing crypto. Previously, EY determined that cold wallets suspected of holding the funds were empty.
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