Creditors of the now defunct Canadian cryptocurrency exchange, QuadrigaCX may get compensated sooner than later, as Ernst & Young (EY), the court-appointed monitor investigating the case, has advised the firm to commence bankruptcy proceedings as soon as possible, to cut costs and expedite the creditors’ refunds process, reports Bloomberg on April 2, 2019.
Quadriga to Dump Rehabilitation for Bankruptcy
Per sources close to the matter, Quadriga Fintech Solutions Corp, the creator of the distressed QuadrigaCX exchange, have been asked by Ernst & Young, the court-appointed monitor, to dump its ongoing restructuring proceedings and file for bankruptcy instead.
EY has reported that going ahead with bankruptcy proceedings will make things easier for everyone as it would enable Quadriga to cut costs, while also facilitating the recovery of assets for creditors.
The embattled crypto exchange which was forced to shut down operations in January 2019, following the sudden demise of founder Gerald Cotton earlier in December 2018, currently owes its clients about $195 million and EY has made it clear that creditors may never get refunds if the platform remains in restructuring mode.
Against that backdrop, EY has advised Quadriga to move from restructuring to bankruptcy, since the latter is more cost effective and it would give the trustee more power to carry out critical investigations regarding the saga, while also making it possible to sell the exchange’s assets or even the entire platform if the need arises.
All Assets Frozen
Reportedly, Ernst & Young has revealed that Cotten did not bother separating the funds used in running the exchange from his personal accounts. Therefore it is possible that the founder may have used customers’ funds to purchase assets outside the exchange.
EY has now prepared an order requesting to freeze all assets in Cotten’s estate as well as those controlled by his widow, Jennifer Robertson, including Robertson Nova Property Management Inc., Robertson Nova Consulting Inc., and Seaglass Trust.
Interestingly, Ernst & Young has also stated that efforts made by Quadriga to recover some customers’ funds held by third-parties including Robertson Nova Consulting, whose sole director is Jennifer Robertson, have been futile so far.
The accounting firm claims it is also encountering difficulties with some of the payment processors, including Billerfy, and Costodian, while WB21, who hold a massive chunk of the funds, has been “uncooperative with the Monitor’s requests and has failed to provide even basic information.”