5 conclusions of the QuadrigaCX hearing

05 Feb, 2019 | Updated: 05 Feb, 2019
by Joeri Cant
Exchange
5 conclusions of the QuadrigaCX hearing

QuadrigaCX, once the largest Canadian cryptocurrency exchange and now definitely the most infamous one, had its first day in the Supreme Court of Nova Scotia, where the presiding judge Wood granted the requested 30-day creditor protection to the exchange. Let us take a look at what we can conclude so far.

The self-proclaimed leading Bitcoin exchange in Canada, has had its first day in court and was granted the requested 30-day creditor protection by judge Wood. QuadrigaCX lawyers requested the 30 days of protection from creditors in an attempt to recoup their losses.

While the details of this insane story are unfolding while we speak, there are a few conclusions we can come to about the QuadrigaCX story so far.

1. Judge grants 30-day creditor protection

QuadrigaCX laywers appealed to the Supreme Court of Nova Scotia on February 5 for temporary protection from its creditors, and were granted exactly that by the presiding judge Wood.

By ruling in QuadrigaCX's favor, judge Wood allows QuadrigaCX the opportunity to restructure their troubled affairs. By allowing QuadrigaCX to restructure its financial situation, through a formal 'Plan of Arrangement', the 'Companies' Creditors Arrangement Act' presents an opportunity for QuadrigaCX to avoid bankruptcy and will hopefully allow the many creditors to receive some form of payment for amounts owing to them by the cryptocurrency exchange.

Read more: QuadrigaCX court hearing: Judge grants 30-day creditor protection

2. Judge Wood doesn't know what subreddits are

To those familiar with Reddit this might come as a surprise, but many, if not most judges probably aren't well-versed in the Reddit universe.

That could be seen as the funny note to this sad story, however, it isn't. How can we trust a judge to understand the hopelessly complicated world of cryptocurrency, if he doesn't even know what a subreddit is?

David Gerard, author of the book 'Attack of the 50 foot Blockchain' said in relation to this case, that one of the biggest problems with asking regulators to step in and solve this 'digital cash conundrum' is that almost no one is actually qualified to do it.

'At the moment, literally the best investigative source we have is the QuadrigaCX2 Reddit forum', he said.

The problem is ofcourse, that with Reddit rumour mixes with facts, and to distinguish one from the other will be no small feat. So, judge Wood better picks up the pace and might want to use 'the google' for 'the Reddit'.

3. QuadrigaCX keeps on finding money

QuadrigaCX lawyers claim that the possibility exists that there may be as much as $180-million of cryptocurrencies 'floating around out there' that they haven’t yet found.

Apparently, this case just took a twist to the unexpected, as there might be some hope after all for the 115,000 QuadrigaCX clients. If they can locate all this digital cash that is.

QuadrigaCX laywers seemed hopeful that one day they would be able to locate the funds and make people 'whole again'. However, so they stated, that’s for some other day, 'far into the future'.

Read more: QuadrigaCX court hearing begins: hope to find wallets, 'far in future'

4. Canadian goverment won't be bailing out crypto investors

Ok, this seems like a forgone conclusion, doesn't it? However, if a finanical crisis of this magnitude would occur to any other group of Canadians who got robbed out of nearly $200 million CAD, the country would be up in arms, protests on the street, outrage throughout mainstream media and public opinion. The country and the government would be loosing its head, and bailout would be at least a plausible consideration.

But not when it comes to cryptocurrency?

5. Question of jurisdiction is settled. QuadrigaCX case stays in Nova Scotia

The monitor Ernst and Young, raised the question wether Canada is the right jurisdiction to handle this kind of bankruptcy, while other laywers pointed out that it is highly unusual for a court in Nova Scotia to have jurisdiction over 3 British Columbia companies and all their shareholders even though it has no territorial competence.

However Judge Wood ruled that The Supreme court of Nova Scotia does have jurisdiction.

Read more: Who is Gerald Cotten, the allegedly dead co-founder and CEO of Quadriga CX?

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Read more about: Canada Bitcoin (BTC)

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