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Major Canadian Crypto Exchange QuadrigaCX Clashes with Bank over $22 Million in Frozen Funds

Last Updated March 4, 2021 3:48 PM
David Hundeyin
Last Updated March 4, 2021 3:48 PM

QuadrigaCX , Canada’s largest cryptocurrency exchange has been denied access to CA$28 million of its funds domiciled in the Canadian Imperial Bank of Commerce (CIBC) since January 2018. The company, based in Vancouver has reacted furiously after the bank decided to freeze several accounts operated by Quadriga’s payment processor.

Legitimate Question or Conjecture?

The Globe and Mail  reports that CIBC froze the accounts following its inability to ascertain the real owners of the funds and requested the court to take possession of the funds in question. It has also asked for a pronouncement on the rightful owners of the funds between the payment processor, Quadriga, and the 388 people who made deposits for the purchase of cryptocurrencies. Quadriga posits that a large chunk of the funds in contention belong to it and that it is inappropriate for the bank to freeze the account.

A court document quotes the trading platform urging the court not to yield to what it described as an unverified and invidious conjecture that the transactions are questionable. Margaret Waddell, Quadriga’s lawyer claims the judge has reserved his decision in the hearing on the case. The CIBC on its part has refused to make any comments on the case.

In Quadriga’s opinion, the CIBC has deliberately held on to depositors’ funds since January 8, 2018. It also accuses the CIBC of seeking ways to further prolong the holding of these funds while trying to rationalize an act that should not have happened in the first place. Quadriga has informed its customers via email that Canadian banks are colluding to make its operations difficult by hindering its efforts to access funds in its savings accounts. This it claims, is a coordinated effort to fight against the adoption of bitcoin and cryptocurrencies in the country.

Old versus New

While none of Canada’s five biggest banks have responded to these claims, the lawsuit suggests a fierce contest between the crypto world and the conventional banking system in Canada. It comes at a time when bitcoin ownership is rapidly increasing among Canadians, with a study showing that bitcoin ownership jumped 72 percent in just 12 months from 2016 to 2017.

Major global crypto platforms like Huobi have also made their entrance to the Canadian market over the past few months as the country’s crypto market increasingly attracts attention that was once monopolized by its northern neighbor. The spike in crypto adoption and trading in Canada has also coincided with a push by financial regulators to sanitise the crypto space in the country, with coordinated regional efforts like ‘Operation Cryptosweep‘.

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