Canadian Crypto Exchange QuadrigaCX In Legal Battle With CIBC Bank Over Millions In Frozen Funds

Vancouver-based cryptocurrency exchange QuadrigaCX is waiting on a ruling after filing a lawsuit against the Canadian Imperial Bank of Commerce after the bank froze several accounts belonging to the exchange’s payment processor.

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Vancouver-based cryptocurrency exchange QuadrigaCX (“Quadriga”) is waiting on a ruling after filing a lawsuit against the Canadian Imperial Bank of Commerce (CIBC) after the bank froze several accounts belonging to the exchange’s payment processor and owner for over $20 million.

Frozen accounts delay user transactions

CIBC froze several accounts belonging to the payment processor Costodian Inc. and its owner Joes Reyes, making it impossible for the exchange to access funds totaling of $21.6 million since the start of the year.

The bank filed a factum with the Ontario Superior Court of Justice stating that it still hasn’t been able to identify the owner of the account, which is the reason why the accounts were frozen.

The bank is urging the courts to seize the accounts and decide if the money belongs to Costodian Inc., its owner or the nearly 400 people who deposited funds to purchase cryptocurrencies.

In its complaint, Quadriga stated that it has been unable to access $21.6 million of its funds.

Between December 4, 2017, and February 20, 2018, 388 users deposited approximately $51.8 million into their accounts. Some of the funds were later withdrawn, leaving only $21.6 million, which the exchange has since been unable to access.

The ongoing legal troubles have led some investors to empty their wallets from the exchange. In its filing, Quadriga claims that the bank is wrong in its decision to freeze the funds and claims that most of the money belongs to the company.

Quadriga claims to have already credited their users with their purchased cryptocurrencies, which makes them the owners of the frozen funds.

The exchange further claims that this dispute is due entirely to the stigma surrounding cryptocurrencies with regard to money laundering, rather than any legal or factual basis.

Ongoing case continues to affect Quadriga’s business

Quadriga is a trading platform that provides services for people interested in cryptocurrencies and nothing more. In their factum, they state

“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,”

Quadriga’s lawyer, Margaret Waddell believes that the case has been heard in-depth over the summer and that the judge needs to pass a decision on the issue as the ongoing freeze continues to affect the exchange’s business.

Gerald Cotten, CEO at Quadriga stated that a small fraction of its 350,000 users continue to be affected by the frozen funds.

According to the Globe and Mail, none of the allegations the bank raised against the exchange have yet been proven in a court of law.

Cotton stated that the number of participants in the cryptocurrency industry who have been shut out by banks is huge and continues to increase. Quadriga even went further to tell its clients that banks in the country as conspiring against crypto-related businesses.

A Reddit account which claims to belong to Quadriga stated that once the court issues its ruling on this issue, they would file a motion against the CIBC for the damages inflicted on their business over the past few months.

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