QuadrigaCX: Can't access cold storage, filing for creditor protection

31 Jan, 2019
by David Borman
QuadrigaCX: Can't access cold storage, filing for creditor protection

Chepicap recently reported on the shutdown of QuadrigaCX for "maintenance," and reddit subsequently accusing them of an exit scam. Well, a new statement from the exchange sounds pretty dire. Basically, the announcement says that the exchange is unable to access its cold storage wallets and is seeking protection from creditors. Probably not what users wanted to hear.

The statement is not long and reads as follows:

"Dear Customers,

An application for creditor protection in accordance with the Companies' Creditors Arrangement Act (CCAA) was filed today in the Nova Scotia Supreme Court to allow us the opportunity to address the significant financial issues that have affected our ability to serve our customers. The Court is being asked at a preliminary hearing on Tuesday February 5 to appoint a monitor, Ernst & Young Inc., as an independent third party to oversee these proceedings.

For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us. Unfortunately, these efforts have not been successful. Further updates will be issued after the hearing."

It has been speculated that part of the problem could be the death of the exchange’s founder, Gerry Cotten. It is possible Cotten alone knew the keys to accessing the cold storage wallets.

This event comes 20 days after a statement on reddit claimed that the issue was tied to securing funds from BMO bank, and though this statement does reference that issue, it seems other big issues are afoot as well.

The filing for creditor protection is a strong sign that the exchange knows it won't be able to fix this. Once again, users of a crypto exchange may be left hanging. As always, stick with Chepicap for all updates on this unfolding drama.

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