With Months of Court Hearings Behind Them, QuadrigaCX Enters Bankruptcy
The issues with the QuadrigaCX platform have been well-publicized over the last few months, though the troubles date back to the beginning of last year.
Creditors have remained somewhat hopeful that their funds would be magically discovered and returned to their wallets, but it doesn’t look like that is happening now. With no options left that the attorneys have found, Novia Scotia Supreme Court Judge Michael Wood ruled that the Canadian exchange should transition into filing for bankruptcy.
The ruling states that QuadrigaCX will have to file for bankruptcy sometime next week, which makes it look like this is finally the end of the dramatic hearings that have played over and over through the last few months.
The original filing for creditor protection happened at the end of January, as the exchange expressed their inability to access about $136 million that was being held in cryptocurrency. The exchange said that they would need help in reclaiming $53 million in fiat as well, which was allegedly held by third-party payment processes at the time.
Ernst & Young (EY), the court-appointed monitor, managed to find some of the assets through these connections, but there has no specific amount that has been publicly announced to have been found or still left. Wood stated at another hearing that, based on what’s happened thus far, it doesn’t look like the exchange will see a recovery period anytime soon.
EY added that there is nothing more than a “remote” possibility that Quadriga can come back from these damages now.
By moving into bankruptcy, EY will have more investigative powers to locate the missing funds. As they are located, the monitor will also be able to sell off assets of Quadriga, which includes the trading platform, in an effort to get some revenue to pay the creditors.
Still, Quadriga will be able to maintain their protection from lawsuits for a little longer, as this aspect of the case is not planned to be dealt with until a hearing on April 18th.
In the hearing that urged Quadriga to enter bankruptcy, Judge Wood also approved a preservation order that founder Gerald Cotten’s widow, Jennifer Robertson, filed. The order prevents the courts from using funds from the private estate from being used in the retribution to creditors.
At least for now, Robertson will have access to sending and receiving funds in a personal account and a corporate account, but EY will be overseeing everything she does. All other assets of Robertson will remain frozen for now.
There are multiple third-party payment processors that have come forward, saying that they have some of the funds that QuadrigaCX is technically the owner of. A deadline of April 18th has been implemented for Billerfly, Costodian, and 1009926 BC to determine how the information will be provided to EY.
Several other exchanges are being urged to come forward as well, including Alto Bureau de Change and Black Banx (formerly WB21). One processor, VoPay, appears to be the most compliant of all, even saying that the funds will be turned over without so much as a service fee.
There is still a lot of questions in this case that have been left without any answers or even clues. Some people wonder if Quadriga actually holds what they say they do in funds, while the number of creditors has also been largely debated. Hopefully, more light will be shed on this fiasco when EY’s progress report is published in ten days.