Canadian Court Grants Troubled QuadrigaCX 45-Day Extension To Find ‘Lost’ Crypto Funds
Embattled Canadian crypto exchange QuadrigaCX has had the stay of proceedings issued in early February extended for another 45 days.
Judge Michael Wood, sitting at the Nova Scotia Supreme Court, indicated that he was okay with the extension, setting the next hearing date on April 18.
It means that QuadrigaCX has a little more time in which to try and locate the missing cryptocurrencies, valued at nearly $140 million. Until this period expires or the stay is lifted, the firm will not face any lawsuits from the creditors.
On Tuesday, Quadriga attorneys told the court that the crypto exchange had made some progress and that the company “owe[d] it to everyone in the process to go on as long as is reasonable.”
A lawyer representing Ernst & Young, the court-appointed monitor overseeing Quadriga’s efforts, explained that progress had currently reached the data and asset recovery stage. She, therefore, noted that the companies would do with some “breathing” space as they continue with efforts to get the crypto.
At the same time, the judge approved the appointment of Peter Wedlake as a chief restructuring officer (CRO) to work with EY to recover the “lost” assets.
Wedlake, a senior VP at Grant Thornton, is expected to manage the exchange and its subsidiaries. The CRO will only work in the direction of the monitor to avoid duplication of roles and thus reduce costs towards creditors.
Besides, the CRO will bill on an hourly basis and not the more expensive monthly rate- a move all parties agreed would further cut creditor costs.
The appointment of the restructuring officer was necessary given that the widow of Gerald Cotten, the exchange’s late CEO, had minimal experience in how to run a crypto exchange.
According to Quadriga attorney Maurice Chiasson, Jennifer Robertson also had reservations about the infamy her new position had brought upon her. There was also the chance of there being a conflict of interest given that Robertson was the executor of her late husband’s estate.
In others orders granted by the court, Judge Wood ordered that Amazon Web Services should hand over data related to an account that Cotten reportedly created and which allegedly contains QuadrigaCX data.
An attorney representing EY told the court that Amazon wasn’t opposed to releasing the data, but wouldn’t do so as Cotten’s account was a personal one and not for business. As such, only a court order would compel them to release data from the account.
The judge will also speak to representatives of specific payment processors that have not yet forwarded funds belonging to Quadriga, either to the exchange itself or to its monitor EY.
In another ruling, the judge deferred making an order regarding the repayment of about CAD 300k or $225 to Robertson, being the amount she paid to initiate the Companies’ Creditors Arrangement Act (CCAA) process.
It appears the QuadrigaCX case is more of an end process rather than one that will end in a typical restructuring, with previous comments from the company’s legal representatives indicating that the exchange would be willing to sell the trading platform.
And that has been reflected in the judge’s comments that the proceeding will likely have to change from one dealing with creditor protection under the CCAA to one about something similar to a bankruptcy. He added:
Wood noted that the case “does look like an end process,” and that most of the issues wouldn’t be about restructuring but about settling claims and liquidation.
While progress is being reported, it is clear much is yet to come to the surface and more so, if the exchange’s users will get their crypto back.
Meanwhile, questions still abound as to what actually happened at Quadriga, especially after EY revealed that the exchange’s cold wallets were empty.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.