Canadian Securities Regulators Are Probing into Controversy Surronding QuadrigaCX Exchange
According to a recent report released by Reuters, it seems that the Ontario Securities Commission (OSC) is looking into Quadriga CX. The investigation started due to the effect that regulatory gaps have over investors and the market. In this case, the Quadriga CX exchange has been involved in a series of controversies after high officials at the exchange informed that they have liquidity issues.
However, the reason why the exchange has liquidity issues is not something very common. The founder of the platform Gerald Cotten died in December during a trip to India. Cotten had access to passwords and the private keys of the cold wallets where the exchange stored the digital assets.
Ina recent statement sent to Reuters, the Ontario Securities Commission said that they are looking into this matter due to the potential harm to Ontario investors. The question is who will be accountable for any potential losses regarding this situation.
The OSC will be analysing whether the exchange breached securities laws in Ontario. The co-chair of the law firm Goodmans LLP., Allan Goodman, explained:
“For example, should (Quadriga) have been registered as an exchange and were any securities laws breached with respect to the trading of coins on the exchange?”
The virtual currency platform lost between $135 million and $150 million in cryptocurrencies. There are also some fiat currency deposits that have been compromised. The exchange had also some problems with banking institutions that decided to freeze the funds that the exchange had.
If the OSC finds any securities law violations, the OSC could bring an enforcement action against the company or its officer and directors. As Goodman explains, it might be possible for the exchange, if it recovers some of the funds lost, to address possible losses for customers.
Some of the virtual currencies that the platform was trading are Bitcoin (BTC), Litecoin (LTC) and Ethereum (ETH), all of them in the top 4 virtual currencies in the market in terms of capitalization. Until now, the company filed for creditor protection in the Nova Scotia Supreme Court.
This is not the first time that a cryptocurrency exchange loses part of the funds that it had. Earlier this year, the New Zealand-base platform Cryptopia lost more than $2 million in virtual currencies such as as Ethereum.