Troubled QuadrigaCX Gets Stay Of Proceedings, But Lawyers Could Sell Company To Repay $190 Million ‘Lost’
The Nova Scotia Supreme Court has granted QuadrigaCX, one of Canada’s largest crypto exchanges, an order for creditor protection even as the exchange tries to find the $190 million needed to pay its 115,000 users.
The exchange, through an affidavit filed earlier, had requested the court to grant a stay of proceedings to prevent anticipated flooding of lawsuits.
In the February 5 hearing, Justice Michael Wood agreed and gave QuadrigaCX a 30-day stay stopping any potential lawsuits.
Canadian broadcaster CBC has also reported that the court appointed a lawyer to take custody of the encrypted laptop said to have been used by the exchange’s founder and CEO Gerald Cotten.
The 30-year-old Cotten reportedly died suddenly from Crohn’s disease while in India on December 9 last year.
In January, Cotten’s widow Jenniffer Robertson filed an affidavit stating that the exchange’s representatives could not access the laptop.
According to CBC, the court has ordered the encrypted laptop be handed over to lawyers representing the creditors before they in turn hand it to a court-appointed monitor.
The exchange expects to use the 30-day stay of proceedings to try to locate the $190 million that is allegedly inaccessible as they were stored in a cold wallet.
The troubled exchange says that Cotten was the only person who had access to the cold wallets and thus had sole custody of the recovery code and passwords.
Some within the crypto industry are however questioning the exchange’s stance that most of the funds were stored in cold wallets, with some suggesting it could be a cleverly executed exit scam.
The same concerns have also been expressed from within the exchange’s user community, with some unconvinced with the story behind Cotten’s death.
However, a death certificate circulating online – ostensibly issued by the Directorate of Economics and Statistics in the Indian city of Jaipur- “proving” that indeed the QuadrigaCX founder is dead.
Elsewhere, it is being reported that Cotton filed his will less than a fortnight before he died. According to a Bloomberg article, the late CEO signed the will on November 27, 2018, just 12 days be he died on December 9.
Documents show that the deceased appointed his wife, Jennifer Robertson, as the sole beneficiary as well as executor of his estate.
Nonetheless, QuadrigaCX lawyers have indicated that they would have to sell the company to clear the massive debt if efforts to locate the wallet recovery keys prove futile.
According to Robertson’s sworn statement, the exchange had about $147 million in crypto holdings and roughly $40 million is held up at payment processors.
The story surely doesn’t end here.
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.