With Millions At Stake
What Will Happen Next?
02.10.2019
With 2018 being the year the bottom fell out of the crypto Market, the scene surrounding one of Canada's largest crypto exchanges QuadrigaCX isn't much different.
Local Favorite QuadrigaCX was a icon in the Bitcoin Movement here in canada. Not only a Crypto Exchange, but a much needed payment processor in the crypto world. Allowing Crypto Enthusiasts a way to turn their crypto into Canadian Dollars.
QuadrigaCX founder Gerald Cotten was on a trip to India. There he was helping complete construction of a Orphanage for which he had contributed a large portion of the funds.
Though always wearing a smile in the pubic eye Gerald Cotten had been battling a debilitating case of crohn's disease for much of his adult life. At a very young age of 30, Gerald Cotten surcame to his ailment Dec. 9, 2018, at 7:26 p.m at Fortis Escorts hospital in Jaipur, India.
This friend to the crypto world will be missed by many!
With 2018 being a year of high-profile hacks of exchanges. It's no wonder many exchanges implement a system of cold wallets and hot wallets as to keep a minimal amounts of funds out in the open, in case of a security breach/hack.
“Click the next link To learn more about hot and cold wallets” https://medium.com/coinmonks/what-are-hot-wallets-cold-wallets-and-hardware-wallets-explain-like-im-5-a17e01b5b179
In QuadrigaCX case, Gerald Cotten was the soul party at quadrigaCX that managed all the cold and hot wallet transactions and was the only person with the private keys needed to access all the crypto stored in cold wallets.
With his untimely death the hot wallets on the QuadrigaCX exchange quickly dried up. The website became unreachable and at some points was completely offline. Many users posted on reddit about being unable to access their account. QuadrigaCX finally issued a statement stating they were in the ‘process of applying for creditor protection’ as they had lost all access to there reserve of cryptocurrency.
As of Jan. 31, 2019, there were roughly 115,000 users with balances on QuadrigaCX exchange, with $70 million CAD fiat and $180 million CAD in crypto outstanding to affected customers. These stats are based on a court affidavit filed by cotton's Wife Jennifer Robertson in Nova Scotia Supreme Court january 31, 2019.
On febuary February 5, 2019 QuadrigaCX posted a statement on their website (cited below) with this, the exchange is now inaccessible leaving customers wondering if anything is going to happen and would users being receiving any money back?
“Dear Customers,
Today an order for creditor protection in accordance with the Companies' Creditors Arrangement Act (CCAA) was issued to allow us the opportunity to resolve outstanding financial issues that have affected our ability to serve our customers.
We did not enter into this decision lightly. For the past weeks, we have worked extensively to address our liquidity issues, which include locating our very significant cryptocurrency reserves held in cold wallets required to satisfy customer cryptocurrency balances on deposit and sourcing a financial institution to accept the bank drafts being transferred to us. Unfortunately, these efforts have not been successful. Since we were unable to resolve these issues in a timely fashion, we did not want trading to continue on our platform. We filed for creditor protection to help resolve these matters and preserve the interests of our customers.
With this filing, the Court has appointed a monitor, Ernst & Young Inc., an independent third party to oversee these proceedings as we make every effort to address our customer obligations. Filing for creditor protection allows us to work diligently through the process, and to try ensure the viability of our company.
We are sure you have many questions. We are in the early stages of a long process and we do not have all the answers right now. What we can tell you is that the CCAA process will allow QuadrigaCX to keep all options open to attempt to maximize the funds available for the company's stakeholders. We will provide further updates to the extent possible.
Included below is a Q&A, which we hope will address some of the questions you may have at this time.
QuadrigaCX values and appreciates all of its customers and its employees. We thank you for your support and understanding during this challenging time.
A copy of the Order issued by the Supreme Court of Nova Scotia on February 5, 2019 may be found here
A motion for the appointment of representative counsel for the affected users of QuadrigaCX will be heard in the Supreme Court of Nova Scotia at 9:30 on Thursday, February 14th. A copy of the Notice of Motion may be found here.”
With creditor protection in place at least temporarily what if anything can be done to try and recover the company funds. All this has many people wondering what the future holds for Canada's QuadrigaCX. As With all things pertaining to money and Blockchain this event has awoken a mass of speculative assumptions as to what “really” happened. I try to focus on things that are Fact and can be proven.
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