QuadrigaCX Crypto Exchange’s Partner Costodian Gets $28 Million Frozen by Canadian Imperial Bank of Commerce (CIBC)
Vancouver Based QuadrigaCX Claims Canadian Banking Cartel Has $28M
Canada’s largest cryptocurrency exchange, QuadrigaCX, which is based in Vancouver, is blaming a legal action by a major bank for delays some customers are experiencing while cashing out funds.
They claim that in court documents that it has been unable to access $28-million of its funds since January when Canadian Imperial Bank of Commerce froze several accounts belonging to Quadriga’s payment processor, Costodian Inc., and its owner, Jose Reyes.
While this move took many by surprise, in a case registered at the Ontario Superior Court of Justice, which is located over 3,000 kilometers away from Quadriga’s headquarters, CIBC claimed that it froze the funds as it was unable to determine who legally has possession over the $28 million. This led the bank to query the aforementioned Ontario court if judges could take full possession of the funds to formally decide if the money belongs to Quadriga itself, its payment processor, or the 388 consumers who reportedly deposited fiat contained in the frozen accounts.
Quadriga CEO Gerald Cotten says Quadriga is being unfairly targeted, just because they operate a cryptocurrency business. “The number of individuals in the [B]itcoin community that have been shut out of the banking system is staggering,” Mr. Cotten reportedly said in an email to clients.
Quadriga has mentioned the “Canadian banking cartel” in correspondence with customers. Several major Canadian banks, including BMO Financial Group and TD Bank, have stopped their customers from investing in Bitcoin. This case went to court in summer 2018. However, the judge has yet to reach a verdict. Until further notice, neither Quadriga nor its customers can access $28 million.
The Startup’s Lawyers Addressed:
“This court should not succumb to the bank’s unsubstantiated and highly offensive speculation that there must be shady dealings afoot because Quadriga’s business is a trading platform for individuals trading in cryptocurrencies.”
Although the bank behind this debacle remained inflexible, alleging that 7 out of the 388 depositors had originated wire recalls at one point, the financial institution was incapable to determine if it should’ve gone ahead with honoring the requests. And, as aforementioned, CIBC then requested the Ontario court to take the situation into its own hands, asking the justice system to decide where the money should end up.
Notably, since Bitcoin’s debut almost ten years ago, crypto exchanges have been the primary on-ramp and off-ramp for investors worldwide. Keeping their influence in mind, for much of crypto’s decade-long history, many exchanges from around the globe have been unfairly targeted by banks and governmental agencies. This obvious distaste towards crypto assets has essentially taken the form of biased shutdowns and seizures of an exchange’s bank account. Without banking services, it is nigh-impossible for a platform to fulfill its fiat-processing purposes, essentially bringing some portions of the nascent crypto industry to a standstill.
Although this issue began to subside in correlation with 2017’s jaw-dropping crypto bull run, there are still cases like this one that indicates that banks aren’t willing to accept the crypto ecosystem easily.