QuadrigaCX Exchange Shuts Down Due to Liquidity Issues, Posts Notice on Official Home Page
QuadrigaCX Follows “Temporary Shutdown” By Applying for Creditor Protection in Nova Scotia
It has been no secret that QuadrigaCX has been struggling to stay afloat for some time. Earlier last year, the company had frozen the funds of consumers, leaving them unable to make withdrawals. While the company was in a legal dispute over the crypto assets, CEO Gerald Cotten passed away while on a trip to India, due to his struggle with Crohn’s disease, on December 9th, though the company did not notify the public quickly.
We’ve posted an update regarding the latest on our company operations: https://t.co/qT7reUA17N
— QuadrigaCX (@QuadrigaCoinEx) January 31, 2019
The day after the announcement of Cotten’s passing, QuadrigaCX sent out an email to let them know that the process of fund distribution had begun but would most likely take about two weeks. During those two weeks, members of the community have seemingly been left in the dark for support but have still kept up with information on social media. The company in charge of making sure that users received their funds, Billerfy, commented that the idea of staying on the predesignated timeline that the interim CEO, Aaron Matthews, laid out would be impossible. Much of the blame pointed to banks because they did not “have the appetite to take the drafts,” according to Billerfy.
Now, a new development has arisen. Upon visiting QuadrigaCX’s official website, the only page available features a header that says, “Message from QuadrigaCX Board of Directors.” The letter was posted today, and it states:
“An application for creditor protection in accordance with the Companies' Creditors Arrangement Act (CCAA) was filed today in the Nova Scotia Supreme Court to allow us the opportunity to address the significant financial issues that have affected our ability to serve our customers. The Court is being asked at a preliminary hearing on Tuesday, February 5 to appoint a monitor, Ernst & Young Inc., as an independent third party to oversee these proceedings.”
The CCAA was originally developed by Parliament in 1933 as a result of the economic depression. The statute allows insolvent companies to restructure their business and financial priorities if that amount exceeds $5 million. Approval for the creditor protection without requiring a two-thirds vote of all of the parties involved, though there are other factors that contribute as well.
During every application, the court has to appoint a monitor, who much be a trustee in bankruptcy under the Bankruptcy and Insolvency Act. A trustee in bankruptcy simply means someone who is in charge of administering a bankruptcy estate, which may be an indication that QuadrigaCX is moving towards bankruptcy.
The letter concludes:
“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us. Unfortunately, these efforts have not been successful.”
After the hearing on February 5th, more information will hopefully be available to the community to give any amount of direction to what happens next.
Social media has been on a rampage talking about the “story” that QuadrigaCX has come up with.
Canadian Bitcoin exchange QuadrigaCX has been unable to locate and secure their cryptocurrency reserves held in cold wallets. https://t.co/EDC6wTLGRg
— Kyle Torpey (@kyletorpey) January 31, 2019
QuadrigaCX has lost access to their cold storage wallet because they are incompetent. Stop using Centralized Exchanges. #DEX
— SyndicateCrypto (@SyndicateCrypto) January 31, 2019
Even if they somehow "find" their cold storage, the damage has been done. And chances are good that their crypto reserves have gone "poof". No one (in their right mind) will ever use QuadrigaCX again. #ThoTheirDirectorsMayResurfaceUnderAnotherName
— Chico_Hawk (@chico_hawk) January 31, 2019
One thing that does stick out about their notice is the fact that they cannot “locate” their reserves in a cold storage wallet. One of featured writers, @ProofOfResearch took to twitter to point out some interesting thoughts.
Just yesterday he also pointed out a connected bank may be the black swan of crypto.