Users of the Canadian exchange haven't been able to withdraw their funds for months. What is going on?
Finance Magnates
Canadian cryptocurrency exchange QuadrigaCX claimed in an announcement yesterday that it had filed for creditor protection in accordance with the Nova Scotia Supreme Court. For months, customers of QuadrigaCX have not been able to withdraw their funds from the exchange; over the same period, the exchange’s website has been out of commission for long stretches of time.
According to the announcement, the filing (if successful) will allow the exchange “the opportunity to address the significant financial issues that have affected our ability to serve our customers.” The exchange also says that it requested the court to appoint multinational professional services firm Ernst & Young Inc. as a third-party monitor.
“These proceedings will result in a long process, which will likely result in end users experiencing significant loss,” Skurka told the publication. “There will be a long road ahead for the remaining players to regain the confidence of Canadian consumers.”
Strange Details
Of course, most users see all of the trappings of an exit scam: an exchange that starts to sputter and then shuts down without any real warning, never to return.
But here’s where things get strange.
There are a few things that make the situation a bit more complicated. For one thing, the exchange has stayed fairly active on its Reddit and Twitter feeds, posting updates every few days--the exchange last tweeted less than 24 hours before this article was posted.
The other, far weirder thing about this story is part of the reason the exchange claims that it doesn’t have access to its liquidity. In a statement that has since been removed from QuadrigaCX’s website, the alleged wife, Jennifer Robertson, of the man who founded the exchange, Gerald Cotten, said that Cotten had suddenly passed away while the two were on a honeymoon in India.
Because Cotten was apparently the only person who had access to the paper wallets where the exchange’s liquidity pools were stored, the exchange has allegedly had additional trouble accessing its liquidity pools.
Because of the removal of most of the Quadriga website from public view, however, exactly how much of this is conspiracy theory and how much is fact has gotten rather muddled. It’s unclear how much of the tale has been spun by an exchange losing its grip on its users funds, and how much has been spun by affected users looking for a reason that they can’t access their money.
In any case, the QuadrigaCX reddit has turned into a wild frenzy of accusations, conspiracies, and intrigue. People are upset, and they are not being provided with the help that they need.
Please see our statement regarding the sudden passing of our @QuadrigaCoinEx founder and CEO, Gerry Cotten. A visionary leader who transformed the lives of those around him, he will be greatly
missed. https://t.co/5rvGZ2BfLV
However, there is limited evidence that Cotten did indeed pass away in India. Even if the story is true, Cotten has been quoted in the past saying that the exchange used multi-signature cold storage to hold its funds, not a single paper wallet.
Some in the QuadrigaCX community see the story as a wild attempt to cover up a much simpler (and much more believable) tale.
CoinDesk reported that some of QuadrigaCX’s problems stemmed from a since-concluded battle with the Canadian Imperial Bank of Commerce. The bank froze around $22 million--a significant portion of the exchange’s assets--last year.
Most of the funds were eventually returned to QuadrigaCX. However, Billerfly (the exchange’s payment processor) told CoinDesk that it had been unable to find a banking partner to endorse the drafts. Therefore, Billerfly was unable to transfer any fiat currency to QuadrigaCX, rendering the exchange incapable of processing withdrawals.
This tale does appear to be the truth--or at least far closer to the truth.
Before the announcement was posted on QuadrigaCX’ website, interim CEO Aaron Matthews sent an email to users saying that the exchange was hoping to process customer withdrawals within two weeks.
Something is amiss. News of the recent filing could be a sign that the exchange isn’t actually trying to pull any funny business--but until any documents showing that the filing actually happened are made public, users shouldn’t hold their breath.
Canadian cryptocurrency exchange QuadrigaCX claimed in an announcement yesterday that it had filed for creditor protection in accordance with the Nova Scotia Supreme Court. For months, customers of QuadrigaCX have not been able to withdraw their funds from the exchange; over the same period, the exchange’s website has been out of commission for long stretches of time.
According to the announcement, the filing (if successful) will allow the exchange “the opportunity to address the significant financial issues that have affected our ability to serve our customers.” The exchange also says that it requested the court to appoint multinational professional services firm Ernst & Young Inc. as a third-party monitor.
“These proceedings will result in a long process, which will likely result in end users experiencing significant loss,” Skurka told the publication. “There will be a long road ahead for the remaining players to regain the confidence of Canadian consumers.”
Strange Details
Of course, most users see all of the trappings of an exit scam: an exchange that starts to sputter and then shuts down without any real warning, never to return.
But here’s where things get strange.
There are a few things that make the situation a bit more complicated. For one thing, the exchange has stayed fairly active on its Reddit and Twitter feeds, posting updates every few days--the exchange last tweeted less than 24 hours before this article was posted.
The other, far weirder thing about this story is part of the reason the exchange claims that it doesn’t have access to its liquidity. In a statement that has since been removed from QuadrigaCX’s website, the alleged wife, Jennifer Robertson, of the man who founded the exchange, Gerald Cotten, said that Cotten had suddenly passed away while the two were on a honeymoon in India.
Because Cotten was apparently the only person who had access to the paper wallets where the exchange’s liquidity pools were stored, the exchange has allegedly had additional trouble accessing its liquidity pools.
Because of the removal of most of the Quadriga website from public view, however, exactly how much of this is conspiracy theory and how much is fact has gotten rather muddled. It’s unclear how much of the tale has been spun by an exchange losing its grip on its users funds, and how much has been spun by affected users looking for a reason that they can’t access their money.
In any case, the QuadrigaCX reddit has turned into a wild frenzy of accusations, conspiracies, and intrigue. People are upset, and they are not being provided with the help that they need.
Please see our statement regarding the sudden passing of our @QuadrigaCoinEx founder and CEO, Gerry Cotten. A visionary leader who transformed the lives of those around him, he will be greatly
missed. https://t.co/5rvGZ2BfLV
However, there is limited evidence that Cotten did indeed pass away in India. Even if the story is true, Cotten has been quoted in the past saying that the exchange used multi-signature cold storage to hold its funds, not a single paper wallet.
Some in the QuadrigaCX community see the story as a wild attempt to cover up a much simpler (and much more believable) tale.
CoinDesk reported that some of QuadrigaCX’s problems stemmed from a since-concluded battle with the Canadian Imperial Bank of Commerce. The bank froze around $22 million--a significant portion of the exchange’s assets--last year.
Most of the funds were eventually returned to QuadrigaCX. However, Billerfly (the exchange’s payment processor) told CoinDesk that it had been unable to find a banking partner to endorse the drafts. Therefore, Billerfly was unable to transfer any fiat currency to QuadrigaCX, rendering the exchange incapable of processing withdrawals.
This tale does appear to be the truth--or at least far closer to the truth.
Before the announcement was posted on QuadrigaCX’ website, interim CEO Aaron Matthews sent an email to users saying that the exchange was hoping to process customer withdrawals within two weeks.
Something is amiss. News of the recent filing could be a sign that the exchange isn’t actually trying to pull any funny business--but until any documents showing that the filing actually happened are made public, users shouldn’t hold their breath.
Rachel is a self-taught crypto geek and a passionate writer. She believes in the power that the written word has to educate, connect and empower individuals to make positive and powerful financial choices. She is the Podcast Host and a Cryptocurrency Editor at Finance Magnates.
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