Business 6 February 2019

Derek Tonin

QuadrigaCX wins credit protection, former CEO death confirmed

It was a big day for QuadrigaCX and its customers. The Canadian crypto exchange had its day in court, and Nova Scotia Supreme Court Justice Michael J. Wood ruled in their favor, allowing creditor protection and a 30-day stay of proceedings.

Coindesk reports the ruling was expected. EY, a professional services firm, was appointed as a monitor for the exchange, with the task of helping it locate assets that can be liquidated to reimburse as many as 115 thousand customers who have been left without funds.

In the judgement, Wood noted he was satisfied with QuadrigaCX’s filing based on the Companies’ Creditors Arrangement Act. He made the order effective immediately, after asking a few drafting questions of the exchange.

Some of the questions addressed had to do with the funds that have gone missing with the death of former CEO Gerald Cotten. EY have promised to set up a wallet for any coins that could be recovered from Cotton’s cold storage, and his widow, Jennifer Robertson, noted that she is working with security experts to hack Cotten’s laptop.

Between the funds lost in Cotten’s death and money tied up with payment processors, QuadrigaCX believes there’s $180 million CAD they could potentially recover.

Judge Wood did not let QuadrigaCX get off easy though. He chided the company for not providing their creditors more proper notice for the status of the company, going so far as to note that he could deny their filing with how rushed this process has been. An attorney representing the creditors did not oppose the filing however, as it may be their best chance to recover their funds.

More news came later in the day, especially for those customers who doubted Cotten had really died. Coindesk has obtained a death certificate, issued by the Indian government. The details listed in the death certificate line up with information previously provided by QuadrigaCX and Global Affairs Canada. This will hopefully put to bed rumors that Cotten had faked his death and run off with the money.

QuadrigaCX’s has been totally offline since January 28th, but most users were unable to withdraw funds long before that. The exchange had $21.6 million in assets frozen in a dispute with its banks, and unknown millions are now potentially gone forever in cold storage, access lost along with the life of Gerald Cotten, who had sole access.

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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