Yesterday, February 5, the Nova Scotia Supreme Court held its preliminary hearing regarding Canadian cryptocurrency exchange QuadrigaCX's application for creditor protection, which was filed at the end of last week. As a result of the hearing, a handful of the questions raised earlier this week have been answered.
Court Decision Regarding the CCAA
QuadrigaCX filed for creditor protection in accordance with Canada's Companies' Creditors Arrangement Act (CCAA), which allows a company to avoid declaring bankruptcy and ensures creditors will receive "some form of payment for amounts owing to them by the company." The exchange also asked that the advisory Service Ernst & Young Inc. be appointed as a monitor while it "address[es] the significant issues that have affected our ability to serve our customers."
According to a report from the Canadian news outlet CBC News, we now know that the Nova Scotia Supreme Court gave QuadrigaCX a 30-day stay of proceedings, granting it creditor protection. Court documents also show that Ernst & Young Inc. was appointed monitor by the court and will "monitor the Business and financial affairs of the Applicants, the Property, and the Applicants' conduct of the Business with the powers and obligations set out in the CCAA."
After explaining to the judge what subreddits are, the monitor was ordered to post information regarding the hearing on reddit. (According to some users, the "general inquiry" email address included in the reddit post didn't work.)
The $180 Million Password
One of the major talking points surrounding the QuadrigaCX dilemma is the excess of $180 million in cryptocurrency held in cold storage on founder and CEO Gerry Cotten's personal laptop. The problem is, Cotten passed away on December 9, 2018, and, according to an affidavit filed by his widow, Jennifer Robertson, he took the password to his encrypted laptop along with him. Currently, no one has been able to access the laptop.
CBC News reporter Jack Julian live-tweeted yesterday's court proceedings, and the laptop still seems to be uncrackable. We know the laptop was in possession of QuadrigaCX's lawyers and was being examined by an ex-Royal Canadian Mounted Police computer expert. After that, the laptop was given to the creditors' lawyers and will eventually be given to a court-appointed monitor lawyer.
An Unfortunate Death Certificate
If the internet is good at one thing, it's fueling conspiracy theories. Case in point, questions have been raised regarding Cotten's death. Suspicion grew out of QuadrigaCX's initial tweet about Cotten's death, as the news was posted nearly a month after it happened. Later, after one reddit user found what they believe to be proof that Litecoin was being moved from the exchange's cold wallet reserves, some Twitter users continued to question the veracity of Cotten's death.
Nevertheless, an Indian government-issued death certificate seems to back up the story of Cotten's passing as stated in Robertson's affidavit. However, because nothing about this story can be simple, Cotten's surname is misspelled on the certificate, which reddit users were quick to point out.
As stated, QuadrigaCX now has 30 creditor-free days to find what the affidavit states is $250 million owed to users in cash and cryptocurrency obligations. The exchange has updated its website with a new statement noting that it is in the "early stages of a long process."
Nicholas Ruggieri studied English with an emphasis in creative writing at the University of Nevada, Reno. When he’s not quoting Vines at anyone who’s willing to listen, you’ll find him listening to too many podcasts, reading too many books, and crocheting too many sweaters for his dogs, RT and Peterman.
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