QuadrigaCX Avoids Bankruptcy Files For Creditor Protection After Accounts Freezing

Canadian cryptocurrency exchange QuadrigaCX is fighting for survival as financial woes threaten its existence. The company has had to file for creditor protection having experienced significant financial woes that have made it impossible, for it to meet its financial obligations.

QuadrigaCX Creditor Protection

The filing made in the Nova Scotia Supreme Court presents the company an opportunity to avoid bankruptcy. In addition, it provides a pathway for creditors to receive some payment as the company tries to put its house in order.

Users have in the recent past, struggled to access or withdraw their funds from the exchange a development that has continued to fuel bankruptcy concerns. Insolvency concerns reached peak levels after QuadrigaCX went offline in a move attributed to maintenance issues.

The company says it was forced into filling for creditor protection on failing to locate and secure a good chunk of its cryptocurrency reserves held in cold wallets. Consequently, the company was unable to meet its financial obligations. The court will now have to appoint auditing firm Ernst & Young and task it with the responsibility of monitoring proceedings.

Accounts Frozen

QuadrigaCX finds itself in the current financial woes on the Canadian Imperial Bank of Commerce freezing its accounts. The accounts frozen contained $16.3 million, it is; however, unclear who is the actual owner of the funds between the exchange owner Jose Reyes, and the payment processor, Costodian Inc. In October of last year, the exchange also found itself in a bitter tussle with the bank over $19.6 million.

CIBC is clinging on the funds awaiting Ontario Superior Court determination, of whether the funds belong to the exchange, Costodian or users who deposited money. A previous court ruling failed to ascertain the true owner of the funds. The accountant of the Superior Court has been tasked with the responsibility of identifying the actual owner.

Complicating the current standoff are reports of the apparent death of the exchange founder Gerry Cotten. The announcement threw the exchange into disarray with some users calling for proof death. In the recent past, it has emerged that the exchange may not be able to access some assets believed to be in cold storage as it is only Cotton, who had keys to the accounts.

QuadrigaCX financial woes come at a time of growing concerns about cryptocurrencies future. A good number of have shed more than two thirds in market value fuelling suggestions of a bubble burst in the sector. Investors’ confidence also appears to have hit all-time lows after a breath-taking Bull Run.