After some mixed initial reports on how QuadrigaCX would proceed following its high-profile loss of funds, it is now clear that the Vancouver-based exchange will be filing for bankruptcy. It owes around 115,000 customers some $195,000,000 in damages.
A few months ago, QuadrigaCX made headlines after its founder, Gerald Cotten, died while allegedly being the sole individual with the exchange’s private keys. As a result, customer funds were unable to be retrieved, which has left Quadriga in a strange situation.
The exchange is now officially claiming bankruptcy. The move was approved by the Nova Scotia Supreme Court yesterday.
QuadrigaCX officially closed its doors on Jan 28 and, on Feb 5, gained court protection under Canada’s Creditors Arrangement Act. Ernst & Young has been the acting monitor for the process — and it was under its recommendation that the exchange filed for bankruptcy.
Bankruptcy the Best Option
In a report published on April 1, Ernst & Young argued that the chance QuadrigaCX could recover through “restructuring” seemed remote. The recommendation was a proper filing for bankruptcy — which the exchange has now put in motion.
The reason bankruptcy was recommended was because it would be more cost-effective. Doing so would also allow the trustee more investigatory powers — which would allow for the lost digital assets to be more easily compensated. This recommendation has now been put into effect by the courts.
QuadrigaCX: A Strange Situation
The odd situation QuadrigaCX found itself in was due to the exchange largely running from founder Gerald Cotten’s laptop. However, while on a trip to India, he unexpectedly passed away — which threw the exchange into chaos. Speculation has been abounding about the legitimacy of this story. The fact that QuadrigaCX’s digital storage accounts for Bitcoin were emptied months before Cotten’s death only added fuel to the fire.
[bctt tweet=”Canada’s Nova Scotia Supreme Court has officially approved cryptocurrency exchange Quadriga’s filing for bankruptcy. ” username=”beincrypto”]
Multiple assets held by Cotten’s estate, his parent company Seaglass Trust, and his other funds held by property management firms will also be frozen as a result of the bankruptcy.
A follow-up hearing on April 18 is scheduled to discuss the process moving forward — especially regarding the situation with the exchange’s third-party payment processors.
Do you believe QuadrigaCX’s lost funds will ever be accounted for? Is this the best option for customers? Let us know your thoughts below!