QuadrigaCX, a major cryptocurrency exchange in Canada, applied for credit protection in the Supreme Court in Nova Scotia. The cryptocurrency exchange, which is facing legal and financial troubles for several months, filed for protection to avoid bankruptcy under CCAA (Companies Creditors Arrangement Act). The creditors would get part of the payment from the company.
According to a communicative, the company will request the court to appoint Ernst & Young for monitoring the proceedings. QuadrigaCX will address a considerable portion of the financial issues with the filing and serve the customers. It could not get access to the cryptocurrencies held in the cold reserves despite several attempts. As a result, the company cannot get the backing of FIs to accept the bank drafts.
Canadian Imperial Bank of Commerce freezes $16.3 million
Canadian Imperial Bank of Commerce (CIBC) froze $16.3 million in five accounts of the exchange owner – Jose Reyes and Custodian Inc., its payment processor, in January 2019. The exchange disputed a sum of $19.6 million with CIBC in October 2018.
CIBC requested the Superior Court in Ontario to allow withholding of the funds and determine the owner of the funds. The court has to decide who is the genuine owner of the funds deposited in CIBC accounts. The bank won the ruling in its favor. The court directed CIBC to transfer the funds to its accountant to determine the actual owner.
The demise of Gerry Cotten, the founder of QudrigaCX, further complicated the situation. Some users asked the exchange to show proof of the death of its founder. Few believe exchange could not get access to the funds in cold storage because only the founder knows the key.
Users unable to withdraw funds
According to the reports, the users are unable to withdraw funds for several months. Some of the users claimed they could not access the funds because the exchange is shut down for maintenance.
The exchange has spent several weeks to solve the liquidity issues. It tried to locate the digital assets stored in the cold wallets. The digital assets help the exchange to satisfy the customers.