A Nova Scotia Supreme Court Justice has given defunct cryptocurrency exchange QuadrigaCX a 45-day extension to search for $140 million worth of missing crypto assets. Judge Michael Wood extended the creditor-protection deadline to April 23, which would protect Quadriga from potential lawsuits. The Canadian exchange…
A Nova Scotia Supreme Court Justice has given defunct cryptocurrency exchange QuadrigaCX a 45-day extension to search for $140 million worth of missing crypto assets.
Judge Michael Wood extended the creditor-protection deadline to April 23, which would protect Quadriga from potential lawsuits. The Canadian exchange owes a total of $250 million to its 115,000 users, out of which $140 million has been missing since the mysterious sudden death of Quadriga’s CEO, Gerald Cotten, in December. He allegedly succumbed to Crohn disease while traveling in India’s Jaipur City. Cotten was the only person who had security credentials to access QuadrigaCX’s crypto wallets, according to a court affidavit filed by his widow, Jennifer Robertson.
Judge Wood reluctantly granted an extension to Quadriga after listening to arguments made by the exchange’s lawyer, Maurice Chaisson. Chaisson feared that removing creditor protection would expose Quadriga to endless lawsuits.
“I suspect we would see some lawsuits filed. Such proceedings could be filed in multiple jurisdictions. They could be conflicting,” Chiasson explained to Judge Wood. “You could effectively have a free-for-all.”
Chiasson reasoned that he and Ernst & Young, a court-appointed monitor for the search and recovery of Quadriga’s missing crypto assets under the Companies’ Creditors Arrangement Act (CCAA), needed more time to look for clues. He added:
“Maybe we’ll find them quickly, maybe we won’t. It is far too early to tell whether all of these efforts are going to fail. We owe it to everybody in the process to go on as long as is reasonable.”
Persuaded, Judge Wood reminded the court that he was granting the 45-day stay to Quadriga in “good faith.”
Judge Wood also gave the nod to the appointment of a chief resurrecting officer (CRO) at QuadrigaCX.
Robertson, Cotten’s widow, served as Quadriga’s director alongside her stepfather, Thomas Beazley. The third director, Jack Martel, resigned from his position in February 2019, leaving the other two to handle the court proceedings as Quadriga’s default decision-makers.
Robertson conveyed through Chiasson that she did not want to be Quadriga’s director. She explained that she could not assume the responsibilities of a crypto exchange due to her lack of field experience. Chiasson requested Judge Wood to allow Quadriga to hire a new CRO who will have the expertise to make decisions on behalf of QuadrigaCX.
Judge Wood questioned Robertson over her “lack of experience,” arguing that she was running a multi-million dollar property management company on her own. Chiasson responded by saying that Robertson had her own business to operate and she did not know how her husband ran Quadriga.
“She knew what her husband told her,” Chiasson added.
At the same time, Chiasson said that a CRO would oversee the selling of Quadriga’s remaining assets – or the exchange itself – should they fail to find the lost crypto assets. Elizabeth Pillon, who was representing E&Y, also supported the appointment, adding that they were trying their best to recover Quadriga’s data and assets, which “might move next into the platform monetization.”
The statements followed after the monitor located six of Quadriga’s cold wallets only to find them emptied prior to Cotten’s death.
“This is another cost, another burden,” Judge Wood responded. In a compromised tone, he agreed to the placement as long as the CRO would work towards the direction set by Ernst & Young to avoid “duplication of work,” and to keep the salary minimum.
Judge Wood also granted an order allowing Quadriga’s lawyers and monitor to access its data stored in the cloud. Late Gerald Cotten was using Amazon Web Services cloud computing solutions to keep trading platform data. However, he used private credentials – not Quadriga’s – to access the AWS account in concern. Investigating the cloud data could shed more light on what happened to Quadriga before Cotten’s death.
The next hearing will take place on April 18 at 9:30 a.m.
Last modified: March 6, 2019 6:34 AM UTC