Lawyers, accountants and their associates involved with QuadrigaCX stand outside Nova Scotia Supreme Court in Halifax on Monday. (Andrew Vaughan/Canadian Press)
Less than three months after one of Canada’s biggest cryptocurrency exchanges was shut down a, a bid to restructure Vancouver-based QuadrigaCX has failed and the virtual company has officially entered bankruptcy proceedings.
The move, approved Monday by a Nova Scotia judge, marks a turning point for the 115,000 users who are owed more than $260 million in cash and cryptocurrency, including Bitcoin and Ethereum.
The transition to the bankruptcy process means Ernst and Young, the court-ordered monitor overseeing the case, will be granted enhanced investigative powers as a trustee under the federal Bankruptcy and Insolvency Act.
The professional services company now has the right to compel production of documents and testimony from witnesses.
Quadriga Fintech Solutions Corp. and its related companies were granted protection from their creditors under the Companies’ Creditors Arrangement Act (CCAA) on Feb. 5, but it quickly became clear the company had no real assets — and that the process of recovering the missing funds would be difficu
Soon after his death was announced, court documents revealed he was the only QuadrigaCX employee who knew the encrypted passcodes needed to get at $190 million in cryptocurrency locked in offline digital wallets.
Few of those digital assets have been recovered.
Anonymous QuadrigaCX users continue to use social media to trade in wild allegations, rumours and elaborate conspiracy theories.
In a report released last week, Ernst and Young said it had determined Cotten was mixing his personal and corporate finances, though no details were provided.
The report also said Quadriga funds may have been used to buy assets “held outside the corporate entity.” Again, details were scant.
Still, the monitor asked Nova Scotia Supreme Court Justice Michael Wood for a so-called asset preservation order, which he granted Monday.