New twists and turns are constantly emerging in the case surrounding the $140m in cryptocurrency that went missing when an exchange’s CEO died suddenly in India last December – supposedly taking passwords with him.
QuadrigaCX, the embattled exchange at the heart of the scandal, has now been given 45 more days to try and search for the lost funds. This means that 115,000 affected account holders – otherwise known as creditors – will not be able to launch legal proceedings as work continues to track down their assets.
The extension was awarded to the Canadian company by Judge Michael Wood in the Nova Scotia Supreme Court, after he heard arguments from the lawyers who have been representing QuadrigaCX since it filed for creditor protection towards the end of January.
Ernst & Young, which has been appointed as creditors for the troubled firm, explained that it is currently in the process of recovering assets and data – with its attorneys stressing that “breathing room” was needed so their work could carry on.
The accounting giant shed light on the scale of the challenge ahead in a recent report, which revealed that the cold wallets identified as storing QuadrigaCX’s lost crypto had in fact been emptied way back in April 2018 – eight months before the exchange’s CEO, Gerald Cotten, died from complications of Crohn’s disease in India.
Changes at the top
In other developments, QuadrigaCX is going to appoint a new chief restructuring officer who will be tasked with managing the exchange and collaborating with Ernst & Young in its ongoing efforts to recover lost crypto for affected customers.
Until now, that role has been held by Jennifer Robertson – Mr Cotten’s widow. Critics had questioned whether this was an astute move, and some had even claimed that she may be trying to act against the best interests of the exchange.
As we explained a few days ago, Ms Robertson had given evidence in which she said her position had given unwarranted speculation and had sparked false rumours.
Judge Wood has now approved the appointment of Peter Wadlake as her successor, but only on the basis that he will conduct work at the behest of Ernst & Young to keep costs low and prevent work from being duplicated. His ruling came after QuadrigaCX’s lawyer warned that Ms Robertson had little experience in running cryptocurrency related ventures, wanted to avoid notoriety at a time of grief, and potentially had a conflict of interest.
The drama is far from over – and it’s likely that this is going to be a story that we will keep returning to for weeks and months to come. Reports suggest that more than 800 of those who lost their crypto following the collapse of QuadrigaCX are now contemplating legal action, with 58 of them saying that they would be willing to form part of a steering group that would drive the case against the exchange.
Although any prospect of QuadrigaCX being sued has now been put on ice until April 18 at the earliest, the threat hasn’t gone away.