Canadian Crypto Exchange QuadrigaCX Owes $190 Million To Customers Per New Court Filings
The Canadian crypto exchange QuadrigaCX seems to be deep in trouble now. According to a new court filing from the company, QuadrigaCX currently owes $190 million USD to its customers at the moment. The situation is even worse than it looks, it seems, as the company can’t access most of the funds at the time.
QuadrigaCX, which has filed for protection from creditors, at the time, in order to avoid bankruptcy, owes $250 million CAD (the previously cited amount of $190 million USD) to customers both in cryptos and fiat, according to Jennifer Robertson, the widow of Gerald Cotten, the founder of the exchange.
The trouble went public as the company filed officially for protection and only got worse since then as it does not look likely that the 155,000 users that the company currently has will actually see their funds.
Troubles Began After The Founder Died
Gerald Cotten died early in December 2018 and his company, unfortunately, only went downhill since then. Now, his widow is trying her best, but the situation is far from positive. Cotton had Crohn’s disease and his death was only announced earlier in January.
The main problem was that the man had the sole control of the assets that were stored in the company and he took the funds to the grave. In the court documents, his widow affirms that the company holds at least $92 million USD worth in Bitcoin (BTC), $46 million in Ether (ETH), $6.5 million in Litecoin (LTC), $1.3 million in Bitcoin Cash (BCH), $707,000 in BCH SV, $352,000 in Bitcoin Gold.
At the time of this report, it was still unclear whether all the funds were in cold storage or not, but the court filings explain that only a fraction of the money was stored in hot wallets. Only the founder had the founds and he moved them around in order to avoid thefts.
The widow does not know how to access the funds and, while she has the laptop used by her late husband, she does not know the password or any recovery keys.
Now, nobody knows how to access the funds and to give the money back to the investors. If there is no way to do it, the company will certainly go bankrupt and it can take a long time in order to solve this problem if it is solved at all.
Even fiat currency is hard to acquire as the exchange had its funds frozen by the Canadian Imperial Bank of Commerce for a while and this caused more financial issues for the company. For instance, some payment processors working with the company were unable to send funds to the customers.
Billerfy, one of the payment providers, holds $30 million CAD from QuadrigaCX at the moment, while other three companies hold $565,000 CAD.
To make matters even worse, clients are still depositing funds after the founder died and these funds are all going to an inaccessible wallet.
A Bleak Future
The affidavit sent out by the widow concludes with a request that the court should enter a stay of proceedings to preempt any kind of lawsuit and it urges everyone involved to find a way to negotiate with the banks and find the lost money.
Most of the customers will suffer damages. Most of them are already are. People are complaining that they cannot withdraw any money and that the team has not been communicating properly with them. The whole site went down this week, which made people even more angry and nervous.
This happened because the new directors of the company have decided to pause the exchange for the time in order to sort down what was happening and the site went offline on January 28.
The exchange is considering selling the platform to pay off its debt, too. The board believes that the platform currently holds a lot of value even if the assets may be lost and that interested parties might want to take over what is left in order to restore the company.
The court hearing will be on February 5. Until then, we have to wait for more information about the future of QuadrigaCX.