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Quadriga CX Trustee Has Roughly $29M for Repaying Claims of $171M

Quadriga CX Trustee Has Roughly $29M for Repaying Claims of $171M

After the death of its founder, Gerald Cotten, the Canadian crypto exchange known as Quadriga is facing a rather complex liquidation process. The fate of the company is all but doomed and Ernst & Young, the auditing giant that serves as the exchange’s bankruptcy trustee, has disclosed the massive amount of creditor claims that it has to deal with. EY submitted an update to the Ontario Superior Court in which it confirmed that a whopping $171 million was being demanded by Quadriga’s creditors in payouts. These claims come from a total of 17,053 customers, all of whom had been affected after the exchange went under suddenly.

For the last two years, QuadrigaCX has become an example of exactly how not to run a crypto exchange. Gerald Cotten, the founder of the exchange, died rather mysteriously in India in December 2018, when he was on vacation. The problem was that Cotten was the only man who knew the keys to all the cold wallets of Quadriga, which held customer deposits valued at $150 million. Since his death, the funds have remained locked and customers have filed for getting their deposits back from the company. EY informed the Superior Court in its filing that the claims against the exchange comprise of about $6 million in crypto and 90.2 million Canadian dollars.

The former includes Bitcoin, Litecoin, Bitcoin Cash, Ether, and Bitcoin SV. The company also noted that Cotten had used customers’ funds for trading purposes, which should account for any of the discrepancies that can be found between the assets and liabilities of the company. So far, the auditing firm has sold assets from Cotten’s estate to raise a sum of about $29.8 million. Apart from that, they have also made a settlement agreement with the widow of the deceased and have also obtained funds from a third-party payments firm that had been previously used by QuadrigaCX. 

The auditing firm is now planning to convert all the money they have into Canadian dollars and start allocating the funds to the users. These funds will be distributed in accordance with market prices on April 15th, 2019, when the exchange had finally declared bankruptcy, or February 5th, 2019, when QuadrigaCX had restricted its clients from accessing its website. EY has asked the court to choose the date, so it can begin processing the funds and start calculating exactly how much exposure it has to deal with. EY has requested that all user claims be dealt with equally, as sorting out who gets priority would be inefficient.

Apart from that, the report also highlighted that there were some errors in the claim forms. Some forms weren’t signed, others had no witnesses and some didn’t have the correct account numbers. As nearly a third of the claims have a defect or some issue, it would be costlier to have to follow up on them and making rectifications. Instead, the company just wants to accept them and move ahead with the procedure of potential refunds.

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