Wednesday, February 19, 2020

QuadrigaCX Still Battling Court Cases After a Year

BTCNN aim to be the key source for both digital currency experts and newbies. With the cryptocurrency industry growing so fast we want to educate our readers about all the latest developments as they happen.

Who would’ve thought that the QuadrigaCX drama would drag on this long? Definitely not the estimated 76,000 Quadriga investors who are still owed over $190 million. It’s been over a year already, and the battle to reinstate customers’ funds is still on. But how did it all begin?

QuadrigaCX; Largest Crypto Exchange in Canada Stirs Controversy

QuadrigaCX was founded in 2013, and it was the largest cryptocurrency exchange in Canada. Today, QuadrigaCX has become an excellent example of why cryptocurrency investors should never store their hard-earned money on exchanges.

The QuadrigaCX saga all began in January 2018. Out of the blues, some customers of the exchange were unable to make withdrawals. It was, however, no cause for alarm since the exchange’s leaders had informed that within a few weeks, withdrawals would be enabled.

QuadrigaCX Gives Reasons Why Customers’ are Unable to Withdraw their Funds 

QuadrigaCX gave a bunch of reasons which sounded ‘good enough’ at the time, for the inability of its customers to make withdrawals. Some of these reasons included a court battle between the exchange and the Canadian Imperial Bank of Commerce (CIBC) after CIBC froze the accounts of QuadrigaCX’s payment processor.

Later in January 2019, QuadrigaCX also informed that its CEO, Gerald Cotten, died from Crohn’s disease while in India. As such, Cotten’s demise made it impossible for the exchange for accessing private keys and passwords to cold wallets where customers’ funds were stored.

Crypto Community Investigates QuadrigaCX

At this point, there was a lot of tension in the crypto space. Many crypto enthusiasts opined that the story didn’t add up since the 30-year-old CEO died on December 9, 2018, yet it took Quadriga a month to inform its customers. Much more, findings made to the supposed cold store wallets whose private keys were lost, revealed these wallets have been empty since April 2018. Thus, the exchange was doomed long before the CEO’s demise.

Despite these opinions, a court case ensued between the Canadian crypto exchange with investors seeking to be reinstated. Ernst and Young (EY), a “Big Four” accounting firm was appointed by the court to look into the Quadriga case. Some findings revealed by EY include:

  • Cotten and his wife, Jennifer Robertson, lived an affluent lifestyle using Quadriga funds. The couple bought 16 properties in Nova Scotia, acquired assets valued at $12 million, etc.
  • On June 19, 2019, EY claimed Gerald Cotten stole over $200 million from Quadriga customers and transferred these funds to accounts on other cryptocurrency exchanges.

Based on these findings, the Supreme Court of Nove Scotia had ordered that Quadriga’s assets be liquidated to reinstate its customers. Nonetheless, it is believed that whatever is raised will still be insufficient to reimburse customers.

That may be the least to worry about since the Canadian Revenue Agency (CRA) has also begun an audit of Quadriga’s corporate tax returns. EY believes that this audit may also reduce the amount investors will recover at the end of this case.

Law Officials Probe Quadriga Exchange

The authorities have also been on their toes to settle the matter. In June, the US Federal Bureau of Investigation (FBI) began an investigation to ascertain customers’ account balances. Other authorities looking into the issue include the Royal Canadian Mounted Police (RCMP), and the Ontario Securities Commission (OSC).

In August 2019, EY had also requested that the court case be moved from Nova Halifax to Toronto. It’s however, worthy to note that a Nova Scotia Supreme Court judge approved the move to Toronto early September.

The post QuadrigaCX Still Battling Court Cases After a Year appeared first on BTCNN Canada.

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