Canadian Court Extends Bankruptcy Protection To QuadrigaCX By 45 Days
Nova Scotia Supreme Court has extended the creditor protection it granted to Canadian cryptocurrency exchange QuadrigaCX by 45 days.
Last month, QuadrigaCX had filed for bankruptcy protection in the Supreme Court amid financial and legal troubles following the unexpected death of its founder and CEO Gerald Cotton.
Cotton had died in a hospital in the north Indian city of Jaipur on December 9.
The court issued an order for creditor protection for 30 days in accordance with the Companies’ Creditors Arrangement Act (CCAA) to allow the insolvent company to resolve outstanding financial issues.
The Court also appointed Ernst & Young Inc. to oversee the proceedings as QuadrigaCX makes efforts to address its customer obligations.
QuadrigaCX’s nearly 115,000 customers reportedly lost around $145 million as the funds were placed in a cold wallet for safety, and Cotton was the only person who knew the password.
Judge Michael Wood said it’s appropriate to extend the stay. “There’s value in continuing it and the company — the applicants — are continuing to work in good faith,” he said in an order admitting the plea to grant an extension to the stay order.
He also approved the appointment of a chief restructuring officer (CRO), who is entrusted to manage the exchange and related companies while working with EY in recovering the funds that Quadriga owes customers.
The creditor protection is extended up to April 18, which allows the court-appointed monitor to continue searching for the missing digital assets.
As per an affidavit filed by QuadrigaCX on January 31, there are 26,500 bitcoins, 11,00 bitcoin cash, 11,000 bitcoin cash SV, 35,000 bitcoin gold, 200,000 litecoin and 430,000 ether stored on Cotton’s encrypted and inaccessible laptop.
Securing digital coins in cold wallets, which are offline and encrypted, are a common practice by crypto exchanges. This protects the coins from hacking and virtual theft as it can only be accessed by those who know the password. But, its highly risky too as the entire value of the cold wallet rests on those persons.
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