QuadrigaCX, the crypto exchange that lost access to its funds when its founder died with the private keys, has a court date Tuesday that it hopes will grant it creditor protection and appoint professional services firm EY (formerly Ernst and Young) to oversee its short-medium term operations.
QuadrigaCX’s legal team claim that when founder and sole director Gerald Cotton died in December 2018, he took with him the private keys that would allow access to all the funds on the exchange – some $190 million worth. Granting creditor protection would prevent users from filing lawsuits to reclaim their locked funds, giving the exchange breathing space to try and come to a resolution.
EY Report Outlines Situation
Some have criticized QuadrigaCX for the way in which the incident has been handled, with some doubting that the funds are actually locked and others even doubting that the founder died at all. EY has already begun working with QuadrigaCX and has issued a report that outlines the claims of the estate, with the caveat that it is taking QuadrigaCX’s story on good faith until a full investigation can be carried out.
The granting of creditor protection will allow for such an investigation to be conducted, which should determine what, if any, assets are available for distribution and what is actually owed to its users (EY puts this number at 92,000, less than QuadrigaCX’s claim of 115,000 users). EY has also recommended that the QuadrigaCX platform remain closed for the foreseeable future.
Crypto World Watches and Waits
Should the creditor protection application be granted, QuadrigaCX hopes to continue as an entity until around the end of April, according to EY. If it turns out that there is simply no way of accessing the funds, thoughts will turn to other ways in which the company can appease customers. Sale of the platform is one of the few available options, although with the market in its current state they will be able to command a far lower fee than almost any time since their founding. Should the application be refused, the following weeks and months could be a very messy legal affair, with lawsuits inevitable and little time to evaluate the company and its viable assets.
QuadrigaCX users, and the crypto world in general, will watch with interest as the case unfolds in the coming weeks and months.