Canadian Exchange QuadrigaCX Goes Through Bankruptcy
As predicted, the market operator has been deemed insolvent and received bankruptcy protection.
QuadrigaCX, the Canadian exchange that stopped operating at the end of January, has received bankruptcy protection and will most likely never relaunch, Canadian media reported. Previously, the Monitor for the exchange, Ernst&Young, suggested the market operator was most likely taking the bankruptcy route.
During the bankruptcy procedure, the Monitor will see its investigative rights extended, delving further into the QuadrigaCX history of transactions and fund storage. Some $70 million in cash is most probably locked in third-party accounts, and the search for the digital assets of the exchange will continue. The Monitor will now have the right to compel the delivery of documents, as well as testimonies by witnesses.
A recent incomplete discovery by the Monitor showed that it is possible that some of the exchange’s funds may have been used for personal enrichment. Judge Michael Wood also issued an asset preservation order, to prevent the Cotten estate inherited by Jennifer Robertson from being liquidated.
The potential holdings in digital currencies for QuadrigaCX have been estimated at around $70 to $90 million, with the chief holdings in Bitcoin (BTC), Litecoin (LTC) and Ethereum (ETH).
The next hearing for the exchange will happen on April 18, expected to cover some disagreements between the representatives of payment processors and the Monitor regarding the expansive rights of Ernst&Young.
The QuadrigaCX exchange posed a mystery, as the market had served reliably for years before unraveling fast after the sudden death of the founder under mysterious circumstances. Allegedly, Gerald Cotten, the co-founder of the exchange, was the only person with access to the cold wallets. Later, the investigation failed to turn up addresses that fit the description for cold wallets.
QuadrigaCX had a robust fiat operation which allowed some traders to cash out in the past, before the market closed for withdrawals and eventually ended its services. The QuadrigaCX losses of up to $190 million are comparable to some of the larger hacks or exploits, and the research is yet to show exactly what mistakes and omissions were made to lead to the market’s closing and the potential loss of crypto funds.