QuadrigaCX, the exchange that went bust in a blaze of publicity in January this year, owes $160 million but has only $21 million in assets, according to court-appointed monitor EY. The latest filing from the accountancy firm starkly illustrates the severity of the situation, and offers little hope for those who had designs on getting back the balances they left on the platform at the time of its demise. This means that the exchange owes over 7.5 times what it has on its books, meaning that creditors are likely to get only a fraction of whatever they are owed, without accountancy fees having been taken into consideration.
Complete Review May Not be Possible
In the report, EY also laid bare the difficulties they have experienced in collating accurate figures, citing poor bookkeeping as a contributing factor in the issues they have faced. Knowing that Cotten supposedly died without having put in place any kind of backup plan for accessing the exchange’s wallets, this shouldn’t come as too much of a surprise – the whole operation seems to have been run on the fly with barely any records kept. The situation is succinctly summed up by EY’s man on the ground George Kinsman in the report:
A complete and fulsome review of Quadriga’s financial affairs will take considerable time and effort to pursue and may not be possible or cost effective to complete given the lack of available information, the volume of transactions processed and the number of [third-party payment processors] and crypto currency exchanges involved, many of whom to date, have not fully cooperated with the Monitor’s investigation.
Robertson’s Role Continues to be Questioned
There has been much dispute over the role of Cotten’s widow Jennifer Robertson in the whole saga, with some believing she is part of a conspiracy along with Cotten to steal the exchange’s funds and, eventually, start a new life together. Robertson applied to execute Cotten’s will in December 2018, two weeks after his death and three weeks before she announced to QuadrigaCX customers that he had died and the exchange was not solvent. Executing the will ensured that Cotten’s personal assets, worth millions, could not be used to pay off creditors, a move that some saw as cynical and indicative of inside knowledge of QuadrigaCX’s financial state, while others note that this is standard practice after such an incident.
All we can say for sure however is that QuadrigaCX customers will end up losing at least 87% of their holdings, while Robertson will walk away with the properties and vehicles, including a yacht and a plane, that she protected in the time between Cotten’s death and announcing that the exchange was bankrupt. Until intent is proven either way she will continue to be judged in the court of public opinion, where sympathy has so far been in short supply.
