Canadian-based crypto exchange QuadrigaCX has just recently applied for creditor protection in accordance with the Companies Creditors Arrangement Act (CCAA) in Nova Scotia Supreme Court after having undergone a temporary shutdown. This occurs after the exchange’s admitted its inability to “locate and secure our very significant cryptocurrency reserves held in cold wallets,” although in its official announcement they included that “these efforts have not been successful.”
According to information provided by the professional services company PwC Canada,
“the CCAA presents an opportunity for the exchange, previously ranked 154th by 24 hour trading volume on Coinmarketcap, to avoid bankruptcy and allows the creditors to receive some form of payment for amounts owing to them by the company.”
The announcement also claims that on February 5th, the court shall be asked to appoint ‘Big Four’ auditing firm EY as an independent third party to monitor the proceedings.
The cryptocurrency exchange has been dealing with issues of customers complaining about withdrawal problems with both fiat and cryptocurrencies through various social media platforms for quite a while now. At least some of those stem from a legal battle involving the Canadian Imperial Bank of Commerce (CIBC). During October 2018, the exchange disputed over $19.6 million sums of its funds since January 2018, when the CIBC froze five accounts that belonged to exchanges owner, Jose Reyes, and its payment process, Costodian Inc.
During its court sessions, it was ultimately ruled that QuadrigaCX shall get their funds back, minus a portion, although the exchange seems to be having trouble finding a banking partner to endorse the drafts, meaning it was unable to send any fiat currencies to the exchange and therefore the exchange wasn’t able to process withdrawals. Another issue they are dealing with is that on December 9th, 2018, the exchange’s CEO Gerald Cotten passed away during a trip through India.
This lead towards great amounts of worry and outrage in the community, as it seemed like the chances of them ever gaining their funds back were less likely to happen as days gone by.
Because of possible situations such as this cropping up, experts have stressed, crypto users should keep their private keys on of their crypto coins offline, through the use of hardware wallets such as Trezor or Ledger.