Business 29 January 2019

Erik Gibbs

QuadrigaCX exchange suddenly goes offline for “maintenance”

Canada-based cryptocurrency exchange QuadrigaCX has had a rough couple of months. It saw its assets frozen last October over a dispute over who actually owned funds held by the exchange, before a court ordered most of the funds to be released. Even after business was to return to normal, many users were still unable to withdraw funds, with the exchange arguing earlier this month that the backlog of requests was generating delays. Now, users are growing more concerned as attempts to visit the exchange’s website are met with a message that the site is down for maintenance.

According to the message, which first appeared yesterday, QuadrigaCX’s website states, “Our site is down for maintenance. We apologize for the inconvenience this may cause. We appreciate your patience, and will keep you updated as we know more. Thank you.”

No additional information is available, but it doesn’t seem to bode well for the users who had funds invested in the exchange’s wallets. Posts across social media platforms show the insecurity felt by the customers, with one stating on Reddit, “They will declare insolvency due to an inability to find a suitable bank to host an account and facilitate transfers.”

QuadrigaCX had $19.6 million in assets frozen by its then-banking partner, the Canadian Imperial Bank of Commerce (CIBC). The courts ultimately sided with the exchange and ordered the release of the majority of the funds. However, earlier this month, QuadrigaCX announced that it was still having difficulty accessing over $16 million as it sought to work with a new banking partner to resolve the issues.

Compounding the problem was the sudden death of the exchange’s founder, Gerry Cotten, from a battle with Crohn’s disease late last year. Some have argued that Cotton may have been the sole owner of certain cold storage keys, making it impossible for the funds to be retrieved.

In trying to resolve the issue, the courts initially sided with CIBC, but ordered the funds to be transferred from the bank to the Accountant of the Superior Court. That led to QuadrigaCX having to find a new banking partner and a payment processor to facilitate withdrawals; however, the magnitude of pending requests, coupled with new ones, has prolonged users’ ability to recuperate their assets.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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