QuadrigaCX sees $28M frozen as Canada’s ‘banking cartel’ steps up crypto attacks

QuadrigaCX trustee seeks resolution between digital currency, fiat creditors

The bankruptcy trustee of failed cryptocurrency exchange QuadrigaCX has said it will work to resolve a dispute between creditors before disbursing the firm’s remaining assets.

Professional services giant EY said it would take the matter to court in order to resolve the challenge to how the firm intends to value the digital currency assets held by the exchange.

EY considers the date of valuation to be April 15, 2019. But user BlockCAT has argued that the valuation date should be February 5, 2019, which is the date on which QuadrigaCX entered into bankruptcy protection.

The difference would have a significant impact on how the digital currency assets of the exchange can be disbursed to creditors, influencing how much individual creditors will receive from the eventual disbursement.

The case sees QuadrigaCX creditors line up in two distinct camps: those with claims to fiat, and those with claims to cryptocurrency, respectively. According to initial assessments, the April date means fiat claims will be worth around 23% less than would be the case with the February date.

Claims in digital currency by contrast could expect to receive 14% more with the April date than with the February date.

According to EY, the case is one without prior precedent in Canadian law.

“No bankruptcy court in Canada has previously been asked to determine as at what date claims made in cryptocurrency should be valued in Canadian dollars.”

The case is due to be heard in court on January 26, which will determine whether EY’s April date or the earlier date should be used in valuing the estate. The valuation is an essential predeterminer to any disbursement, which must be made in fiat under Canadian law.

Formerly Canada’s largest digital currency exchange, QuadrigaCX collapsed in January 2019 following reports of the death of its founder, Gerald Cotten.

See also: CoinGeek Live panel, The Future of Exchanges & Trading in a Tokenized World

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