The Nova Scotia Supreme Court hearing has heard QuadrigaCX creditors pleas for reimbursement of funds following the death of the exchange’s founder, but the coffers are reportedly empty.
The Halifax courtroom was told that the USD 70 million in cash and USD 190 million in Bitcoins and other digital assets could not be repaid to the 115,000 cryptocurrency traders owed funds at this stage as there were no funds available.
QuadrigaCX’s misfortune began when the founder and CEO 30-year-old Gerald Cotten died in early December 2018, but the exchange waited until early January to announce his passing. Funds locked in cold storage amounted to 26,488.59834 Bitcoins; 11,378.79082 Bitcoin Cash, 11,149.74262 Bitcoin Cash SV, 35,230.42779 Bitcoin Gold; 199,888.408 Litecoins; and 429,922.0131 Ether at the time of Cotten’s death.
As a result, USD 190 million in missing cryptocurrency is locked in offline digital wallets, but because Cotten was the only person with access to the encrypted passcodes, the funds are inaccessible. With the suggestion that the creditor lawyers’ fees should be capped at USD 100,000, payable by QuadrigaCX, the company’s lawyer was forced to admit, “As of today, we don’t have anything.”
He later claimed the money was to be made available by Cotten’s widow, Jennifer Robertson.
Three teams of lawyers from separate law firms based in Nova Scotia and Toronto have been selected to represent the creditors. Bennett Jones of Toronto and Halifax-based McInnes Cooper have already signed up 181 users who are owed about USD 22 million. McInnes Cooper lawyer Benjamin Durnford said one of the key roles of counsel will be communicating with affected users scattered around the world. Avoiding innuendo on Reddit, where anonymous participants often trade in rumor, would be an issue, he argued.
Meanwhile, Toronto-based Osler, Hoskin & Harcourt and Halifax-based Patterson Law representing 134 affected users owed about USD 19 million told the judge that one of its lawyers was luckily a cryptocurrency expert: “We don’t need to familiarize ourselves with cryptocurrency… We already have that.”
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