Amid Court Proceedings to Return Crypto to Users, Research Shows Canada’s BCSC Won’t Cover QuadrigaCX
QuadrigaCX, a cryptocurrency exchange in Vancouver, was originally established in 2013. According to reports, it was the first exchange that the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) chose to license. The entity has been unregulated until now, even though the BCSC has kept track of it, which is due to the lack of trading securities and derivatives. Without operating as an exchange, spokesman Brian Kladko said,
“BCSC does not regulate it.”
This month has been filled with news from the platform, following the death of founder Gerald Cotten at age 30 as a result of complications associated with Crohn’s disease in December. Now, the platform is trying to reconcile a missing CA$190 million, which is about $145 million in USD.
There wasn’t a plan because no coins left to save OR there was a plan and the plan absconded with the keys and made up a story about a laptop. Either way, highly suspect heavy mixing of coins on @QuadrigaCoinEx wallets and still no cold storage found. So, who is missing lately?
— Jesse Powell (@jespow) February 8, 2019
At this point, the platform has expressed that they have no way to access the cold wallets that Cotten left behind, though there’s a possibility that the information is stored on an encrypted laptop. In a will that Cotten filed about 12 days before he died, he decided that the only beneficiary and executor for his estate was to be his wife, Jennifer Robertson.
Much of the community grew anxious after his death, with some people even alleging that he faked his death to get out with all of the assets that investors had dedicated. However, the Government of Rajasthan's Directorate of Economics and Statistics produced a death certificate, verifying that Cotten had passed away on December 9th.
As more accusations accumulated from the public, Robertson released a statement, saying,
“I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.”
She added that she has been the subject of multiple threats.
The problems within QuadrigaCX started last year after the company was having problems with accessing over $21 million that was in their possession. The funds were frozen by the Canadian Imperial Bank of Commerce (CIBC), affecting five accounts that were linked with the payment processor of QuadrigaCX, Costodian Inc. It was also frozen accounts related to owner Jose Reyes, based on the lack of identifiable evidence of the actual owners of the funds.
The bank won, in this case, according to Judge Glenn Hainey of the Ontario Superior Court, based on the lack of identifiable evidence of ownership, as the CIBC stated. The ruling also determined that the Accountant of the Superior Court was to identify the owner, so the funds were moved to the Accountant’s custody.