Canadian Crypto Exchange QuadrigaCX Files for Creditor Protection, Goes Offline

Canadian Crypto Exchange QuadrigaCX Files for Creditor Protection, Goes Offline

TL;DR: After claiming just days ago their exchange was offline due to “maintenance,” Canadian cryptocurrency exchange QuadrigaCX announced it was filing for creditor protection, an initial step, many experts believe, in heading toward eventual bankruptcy. 

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Canadian Crypto Exchange QuadrigaCX Files for Creditor Protection

A “Message from QuadrigaCX Board of Directors,” dated January 31, 2019, revealed an “application for creditor protection in accordance with the Companies’ Creditors Arrangement Act (CCAA) was filed today in the Nova Scotia Supreme Court to allow us the opportunity to address the significant financial issues that have affected our ability to serve our customers.”

Only days ago, the Canadian exchange posted about being down for seemingly routine maintenance, which was most likely prompted by customers complaining on social media of the site not being online and active. However, the exchange was well known to have had a history of legal problems especially with the Canadian Imperial Bank of Commerce (CIBC).

Canadian Crypto Exchange QuadrigaCX Files for Creditor Protection, Goes Offline

“The Court,” the company’s most recent statement on the matter continued, “is being asked at a preliminary hearing on Tuesday February 5 to appoint a monitor, Ernst & Young Inc., as an independent third party to oversee these proceedings.”

These Efforts Have Not Been Successful

Costodian Inc. is the exchange’s parent company, and just this month its bank accounts were seized by CIBC, holding over $16 million. Evidently CIBC had trouble determining whether those funds were the exchange’s or customers’, and soon a court appointed arbiter was chartered to decide which was which, complicated by the apparent death of the exchange’s owner.

“For the past weeks,” QuadrigaCX detailed, “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. Unfortunately, these efforts have not been successful. Further updates will be issued after the hearing.”

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