Controversial Crypto Exchange QuadrigCX’s Court Hearing for User Fund Recovery is February 5
The cryptocurrency exchange QuadrigaCX has been involved in different controversies related to users’ funds that have been lost. Now, the exchange has appealed for creditor protection and will have to participate in a court hearing today, February 5, in Canada.
The exchange claims that they do not have access to wallets that contain around $137 million in virtual currencies. The appeal was made by the exchange before the Nova Scotia Supreme Court. Due to this situation, the platform claimed that it is not able to pay users at the exchange.
Now, EY, which is overseeing its proceedings, will go at a hearing with QuadrigaCX before the court. During a conversation with CoinDesk, Christine Duhaime, a financial crimes attorney, explained that the most probable outcome during the hearing will be to appoint a monitor.
At the same time, QuadrigaCX filed to apply for creditor protection preventing customers from suing the company to recover the funds that were lost.
On the matter, Duhaime mentioned:
“There are many unanswered questions though, for example, why have the wallet addresses not been disclosed? As you know in Bitcoin world, people know the pooled wallet addresses of exchanges – it is not confidential or business information so that’s an unanswered question that a Court will have to address.”
The first thing that the exchange will have to do to increase the transparency is to present the wallet addresses that were used to store users’ funds.
As reported by CoinDesk, the professional services firm EY has submitted an initial report related to the situation experienced by QuadrigaCX. The company explains that QuadrigaCX is experiencing a liquidity crisis and was not able to satisfy withdrawal requests from users. Moreover, Quadriga has also ben not able to locate the virtual currencies after the death of the Chief Executive Officer (CEO) of the company, Gerald Cotten.
If QuadrigaCX is able to receive creditor protection under the Canadian Companies’ Creditors Arrangement Act, the exchange will be able to perform a full investigation of what happened. According to EY, the exchange is currently owing funds to 92,000 users, less than what the exchange claims (115,000).
Customers will also be able to appeal the decision if the court gives approval for the exchange to receive the protection. Users can protect their interests and seek the return of their funds.
According to EY, it might be possible to recover several funds in a quick way, the cash held by Quadriga’s payment processor and cryptocurrencies or fiat held by third-parties. It is also possible for the company to sell the QCX trading platform since it has considerable value.
Furthermore, the company will also be trying to work with forensic advisors to locate and access missing coins.
This is not the first time that a person dies without leaving information about the private keys he/she held. Virtual currencies can only be accessed if an individual has the private keys of a specific wallet.
Other exchanges have been hacked as well and in many cases, users were able to recover the funds lost. Just a few weeks ago, the cryptocurrency exchange Cryptopia experienced a new hack in which several millions of dollars were stolen from the exchange.
If you want to follow live updates of the court hearing today, you can go here.