QuadrigaCX’s Case: Man Loses USD 422,000, Regulator Curious

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Sead Fadilpašić

Journalist

Sead Fadilpašić

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Sead specializes in writing factual and informative articles to help the public navigate the ever-changing world of crypto. He has extensive experience in the blockchain industry, where he has served...

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June 25, 2023

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The complications surrounding the QuadrigaCX exchange and its downfall have taken many victims: one of them is a software engineer who claims that he lost all his life savings in the fiasco. Because of him and similarly affected users, Ontario Securities Commission, the biggest securities regulator in Canada, is looking into the exchange.

Tong Zou is a software engineer who moved from California to Vancouver in Canada and was looking to save on transfer fees – which cost him CAD 560,000 (USD 422,000). Speaking to Bloomberg in a phone interview, Zou said, “I wasn’t using [QuadrigaCX] for trading – I just wanted to move my money over to my Canadian bank account […] What I didn’t know was that my withdrawal would be pending or incomplete and it never got deposited in my bank account. I’ve been waiting four months so far.”

He bought Bitcoin in the US and transferred it to the exchange, immediately selling it for Canadian dollars, which were supposed to be deposited into his Canadian bank account back in October. This has still not happened.

“I was going to use that money for a deposit on an apartment, but now I can’t do that anymore,” Zou said. “And now I’m currently searching for a job, so it’s kind of a bad time for me.” Following the issues he’d been having with the exchange and its subsequent shutdown, he has been forced to live out of an AirBnB, an online hospitality service. Zou considers himself “one of the largest affected individual users,” according to an affidavit he filed last week as part of the court proceedings.

The total number of people affected by this turn of events is somewhere around 115,000. British Columbia Securities Commission, the province’s securities regulator, recently said they do not regulate QuadrigaCX. This has prompted the Ontario Securities Commission (OSC) to start looking into the case, although their spokesperson Kristen Rose refused to tell Reuters if this was an investigation.

According to Allan Goodman, co-chair of the technology group at law firm Goodmans LLP, the OSC is possibly looking into whether QuadrigaCX has breached any laws. In this case, the OSC could bring an enforcement action against the company or its officers and directors. “If ultimately successful, one would suppose any monetary recovery could be used to address possible losses for customers,” he said.

As reported last week, a court in Canada has placed QuadrigaCX into administration, granting it 30-day protection against creditors’ claims.

The exchange, which is Canada’s largest, also appears to have major debt issues, with allegations of foul play also footed at the company.

As many experts have stressed, crypto users should keep their private keys to their coins offline, e.g. in hardware wallets such as Ledger, Trezor, KeepKey and others.