Crypto Exchange QuadrigaCX Files For Creditor Protection In Nova Scotiabr>
Canadian cryptocurrency exchange QuadrigaCX has filed for creditor protection to allow the company to address the significant financial issues that have affected its ability to serve customers.
In October 2018, QuadrigaCX reported that it has been unable to access 28 million Canadian dollars ($21.6M USD) since January 2018 after the Canadian Imperial Bank of Commerce (CIBC) froze multiple bank accounts owned by the exchange’s payment processor, Costodian Inc., and its owner, Jose Reyes.
CIBC subsequently filed application for an interpleader order asking the Ontario Superior Court to withhold the funds and determine wether the funds belong to the users who deposited the funds, Costodian, or Jose Reyes. The court ruled in favor of CIBC, saying that the bank has met the onus of establishing that there is a real foundation for the expectation of competing claims with respect to the disputed funds. CIBC was ordered to pay the disputed funds to the accountant of the Superior Court to await the outcome of a proceeding to determine entitlement to the funds.
In a statement posted on its website, QuadrigaCX said that they filed an application for creditor protection in the Nova Scotia Supreme Court in compliance with the Companies’ Creditors Arrangement Act (CCAA), a federal law allowing insolvent corporations that owe their creditors in excess of $5 million to restructure their business and financial affairs. The exchange said that it will ask the court at a preliminary hearing on February 5 to appoint auditing firm Ernst & Young as an independent third party to oversee the proceedings.
“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us,” the company said. “Unfortunately, these efforts have not been successful.”