QuadrigaCX
The widow of QuadrigaCX's CEO is asking for reimbursement of her court fees to the chagrin of the exchange's users. | Source: Shutterstock

QuadrigaCX CEO Widow Demands $225,000, Draws Ire of Investors Who Lost $150 Million

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Jennifer Robertson, the widow of Gerald Cotten, the CEO of Canada’s biggest crypto exchange QuadrigaCX, has requested for reimbursement of $225,000 in court fees.

Robertson, who initially filed an affidavit with the Supreme Court of Nova Scotia to reveal the death of CEO Gerald Cotten and the loss of over $150 million in crypto and cash by QuadrigaCX, reportedly claimed she had spent $225,000 to secure QuadrigaCX protection from creditors.

Creditors Who are Owed C$260 million in Cash and Crypto are Outraged

According to Bloomberg, the creditors of QuadrigaCX, who have lost hundreds of millions of dollars in the high-profile scandal, are protesting against the reimbursement of $225,000 to Robertson.

Gavin D. F. MacDonald, a partner at Cox & Palmer, a law firm representing the creditors of QuadrigaCX, said that the repayment of Robertson is inappropriate at this current juncture.

He said:

We are concerned about the repayment by the applicants of C$300,000 to Ms. Robertson in the first week of March contemplated by the filed cash flow projection.

The repayment contemplated by the cash flow is inappropriate until such time as the monitor has reviewed the requested information and satisfied itself as to the source of funds used to fund the CCAA proceeding.

The request of Robertson for reimbursement comes after Ernst & Young, a Big Four auditor and the monitor of the QuadrigaCX case, discovered that five of the six supposed Bitcoin cold wallets of the exchanges were empty and the sixth had shown irregular activities.

The discovery of Ernst & Young followed the claims of independent researchers including James Edwards who found trails to the funds of QuadrigaCX.

A report curated by Edwards claimed that nearly $90 million in Ethereum held by QuadrigaCX were sent to cryptocurrency exchanges such as Bitfinex and Poloniex.

Prior to the discoveries of independent researchers, the monitor reported that QuadrigaCX had mistakenly sent around $400,000 to the cold wallet of its dead CEO Gerald Cotten.

Ernst & Young said:

On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately CAD $468,675 to Quadriga cold wallets which the Company is currently unable to access.

The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.”

If the CEO had passed away with sole control over user funds and the widow used her personal financial resources to protect the company, then the reimbursement could be justified.

However, in a period during which it cannot be proven whether the CEO even had access to $150 million in user funds given that outgoing transactions from QuadrigaCX wallets were spotted right before the death of Cotten, the creditors are against the settlement any repayments until the investigation is complete.

Finally Seeing Progress

The reports from Ernst & Young are being released on a regular basis and major crypto exchanges in the likes of Kraken are proactively assisting investigators in unraveling the truth behind the QuadrigaCX incident.

Until the formal investigation is over, no claims from either QuadrigaCX or independent researchers can be definitively proven.

But, based on the theories provided by independent researchers and companies like Coinbase, and the data provided by the monitor, it has become difficult to believe that the QuadrigaCX incident was simply a case of a freak accident.

The questionable actions of the company, such as mistakenly sending hundreds of thousands of dollars to a wallet that the firm is fully aware cannot be accessed, has fueled the skepticism of creditors of the exchange.

Currently, the creditors of QuadrigaCX are protesting against the issuance of any repayment including Robertson’s $225,000, around $130,000 for QuadrigaCX’s law firm, and $148,000 for Ernst & Young.