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Court Steps in as QuadrigaCX Crypto-Chaos Intensifies

Court Steps in as QuadrigaCX Crypto-Chaos Intensifies 101
Source: iStock/solidcolours

A court in Canada has placed Canadian cryptocurrency exchange QuadrigaCX into administration, granting it 30-day protection against creditors’ claims.

The court has also announced it has appointed financial company Ernst & Young as an independent third party monitor to the court’s administration.

The court will now oversee the exchange’s financial affairs, and will likely launch a full investigation into the case, with the crypto-community already abuzz with theories. Some even claim that the company’s 30-year-old CEO Gerald Cotten may have faked his death, and could be alive and well, hiding out in India having “absconded” with the missing funds. Others speculate that co-founder Michael Patryn has been a using a fake name and he really is Omar Dhanani who was convicted of fraud in the US and was released in 2007.

Many questions will likely be answered when the court gains access to Cotten’s encrypted laptop, which CBC reports will soon be handed over to a court-appointed monitor.

The Vancouver Sun details that court documents “show QuadrigaCX had been facing liquidity issues over the past year. The Canadian Imperial Bank of Commerce [a large commercial bank] froze roughly [USD 19.6 million] of its funds held in the account of a third-party processor in January 2018.”

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Peter Van Valkenburgh, Coin Center director of research, comments on what crypto exchange founder's death illustrates about Bitcoin. He speaks with Bloomberg's Joe Weisenthal, Romaine Bostick and Caroline Hyde on "Bloomberg Markets: What'd You Miss?"

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On Tuesday, the company released a statement, reading, “For the past weeks, we have worked extensively to address our liquidity issues, which include locating our very significant cryptocurrency reserves held in cold wallets required to satisfy customer cryptocurrency balances on deposit and sourcing a financial institution to accept the bank drafts being transferred to us. Unfortunately, these efforts have not been successful. Since we were unable to resolve these issues […] we did not want trading to continue on our platform. We filed for creditor protection to help resolve these matters and preserve the interests of our customers.”

Watch the latest reports by Block TV.

The exchange has been attempting to address major problems with liquidity after the reported death of the CEO, who appears to have died with the access codes to 115,000 wallets that supposedly hold some USD 190 million, rendering the wallets inaccessible.

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 previously reported on Cryptonews.com, one Reddit has user claimed that several wallets had initiated transactions soon after the QuadrigCX case had hit the news.

Researchers at Zerononcense have also claimed they have traced cryptocurrency transfers from at least 31 customer wallets to company-owned accounts.
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