The saga surrounding the QuadrigaCX cryptocurrency exchange out of Canada continues to move forward. The courts seem to be determined to make headway in the case as quickly as possible, likely sympathetic to the plight of more than 100,000 customers who are out a combined $196 million in crypto holdings. A judge has appointed two law firms to represent the customers following a hearing that lasted for most of last week.
The law firms of Cox & Palmer and Miller Thomson were appointed by Nova Scotia Supreme Court Judge Michael Wood yesterday, according to court records (in pdf) in Canada. The two firms had been competing for the job against three other groups – Osler, Hoskin and Harcourt with Patterson Law, Miller Thomson with Cox and Palmer and Bennet Jones and McInnes Cooper – and the decision on which would lead the struggle had previously been expected to be announced last Thursday.
Wood determined that the two winning firms both have “extensive insolvency and [Companies’ Creditors Arrangement Act] experience.” Miller Thomson was also singled out for its experience litigating crypto-related court cases. Wood also stated that both had provided proposals that were “thought out carefully with a view to minimizing costs.”
A current stay of proceedings issued on request of QuadrigaCX and Ernst & Young (EY), the accounting firm brought in to help sort out the exchange’s mess, currently prevents any class-action lawsuit from being introduced. However, that stay is expected to expire on March 7, unless the exchange files for an extension.
If Wood does not approve the extension, or if QuadrigaCX and EY have not made any progress in locating the missing or locked funds, the law firms appointed by the judge will most likely submit the suit. It’s a step in the right direction to find closure in a chaotic, misguided case that never should have surfaced.
QuadrigaCX began by being the victim when its banking partner suddenly froze its assets last year. However, it quickly went from victim to villain when it was discovered that the exchange’s founder, Gerald Cotten, passed away from complications from Crohn’s disease. With his death, access to a number of cold storage crypto wallets instantaneously disappeared, as Cotten was said to solely hold the access. Given that he was aware of his disease, although it isn’t normally fatal, he should have made preparations to pass the torch, just in case.
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