Securities are taken seriously.  Gerald Cotton, the owner of QuadrigaCX, wanted to ensure that the cryptocurrencies of their investors are not accessible to hackers.  He kept the cryptocurrency wallets of their users’ offline.  It was only he, who knew the password.  He died in December, and now there is no clue as to how to open the wallet with $190 million of the cryptocurrency of customers.

In an affidavit submitted by the widow of Gerry, it is mentioned that she does not know the recovery key or the password for the laptop computer from which Gerry was executing his company business.  She further submitted that she was not able to find the key despite repeat diligent searches.

Court Hearing for QuadrigaCX cryptocurrency Wallet Issues is scheduled Tuesday, February 05, 2019.

The appeal is for creditor protection.  The appeal was made in the Nova Scotia Supreme Court.  The appeal claimed that QuadrigaCX does not have access to nearly $137 million in US dollars. The exchange claimed that the company is not able to repay 115,000 customers to whom the company owes funds. While the exchange is working in a solution, creditor protection is being sought by the exchange to prevent lawsuits.

Christine Duhaime, a financial crimes attorney, stated that probably Ernst and Young might be appointed to monitor the issue.

The filing from Quadriga was not only an appeal requesting for a monitor, but as well to prevent customers from being able to sue the exchange to recover the lost funds.

Duhaime further explained that there are several unanswered questions like why the addresses of the wallet have not been disclosed. In the world of Bitcoin people are supposed to know the pooled wallet addresses of exchanges.  Since the wallet addresses are not confidential business information it is an unanswered question that the court should address.  The attorney further stated that someone would be bringing in an application to disclose the wallet addresses.

QuadrigaCX should have maintained transparency as a normal business practice.  Since the wallet addresses are not disclosed it is considered that QuadrigaCX has not maintained transparency.

QuadrigaCX now has to deal with a liquidity crisis.  The current issue is due to several issues like QuadrigaCX not having a corporate bank account. 

The Ernst and Young proposal have recommended that QuadrigaCX maintain the suspension of its website. New directors have been voted in to run the company. It is per the recommendation of Ernst and Young that QuadrigaCX sought creditor protection under the Canadian Companies’ Creditors Arrangement Act.