Skip to main content

A Nova Scotia Supreme Court Justice has granted the beleaguered cryptocurrency exchange QuadrigaCX more time to search for millions of dollars in missing assets.

Justice Michael Wood added more than six weeks, to April 23, to a stay of proceedings that, since February, has blocked panicked creditors from suing Quadriga. The trading platform owes 115,000 users a total of $250-million in cash and cryptocurrency – $180-million of which has been missing since the sudden death of Quadriga’s chief executive, Gerald Cotten, in December. Mr. Cotten was travelling in India when he succumbed to complications related to Crohn’s disease. He was Quadriga’s sole director and the only one who knew how to access funds deposited with the company, according to an affidavit filed by his widow, Jennifer Robertson.

Justice Wood granted Tuesday’s extension after a lawyer for Quadriga warned the judge that he risked triggering a legal “free-for-all” if he allowed the company’s protection from creditors to expire this week as was initially scheduled. While some assets were recovered over the past month, tens of millions owed to users have yet to be found.

Story continues below advertisement

“I suspect we would see some lawsuits filed. Such proceedings could be filed in multiple jurisdictions. They could be conflicting,” said Quadriga lawyer Maurice Chiasson, shrugging. “You could effectively have a free-for-all.”

Mr. Chiasson told Justice Wood that he and a team from Ernst & Young, which was appointed to oversee the search for and recovery of Quadriga’s assets last month as a monitor under the Companies’ Creditors Arrangement Act, need more time to look for answers.

“Maybe we’ll find them quickly, maybe we won’t,” he said, adding: “It is far too early to tell whether all of these efforts are going to fail. We owe it to everybody in the process to go on as long as is reasonable.”

One key figure is seeking to be extracted from the process: his widow. Ms. Robertson replaced her husband as Quadriga’s default figurehead after his death. Despite not having any previous involvement with the company, according to an affidavit she filed with the courts in January, she was one of three new directors appointed to oversee Quadriga that month. One of those directors has since resigned, leaving Ms. Robertson and a second director, her stepfather, Thomas Beazley, as the company’s decision-makers. Ms. Robertson is also the executor of her husband’s estate.

“Ms. Robertson would prefer not to be a director,” Mr. Chiasson told Justice Wood. “The notoriety that has followed this particular case makes it so that – she wants to co-operate, she wants to be helpful and she wants to be out of the limelight to the extent that is ever going to be possible,” he said.

Mr. Chiasson made the comments as part of an argument mounted to persuade Justice Wood to allow Quadriga to hire a chief restructuring officer (CRO) who “has the experience to actually act in an appropriate manner” to make decisions on behalf of the company.

Justice Wood questioned whether Ms. Robertson, who runs her own property management company with about $6-million in assets, is unqualified to make Quadriga-related decisions. Those include handling offers to purchase the company – several expressions of interests have been made.

Story continues below advertisement

“She has her own business but [is not] particularly versed in this one,” Mr. Chiasson said. “She knew what her husband told her.”

Justice Wood ultimately consented to the appointment of a CRO but said Ernst & Young would need to approve the scope of the officer’s work to avoid duplication and undue costs. He also granted E&Y an order that will compel Amazon Web Services to give the monitor access to its servers, some of which contain records of Quadriga’s users and their transactions.

While many of the company’s users prefer to remain anonymous, nearly 800 have been in touch with lawyers appointed to set up a committee to represent the interests of Quadriga users, the court heard Tuesday. Lawyer Greg Azeff told Justice Wood that 58 Quadriga users have applied to sit on the committee. A final decision on its makeup is likely to be made next week.

Before adjourning, Justice Wood encouraged lawyers representing each party to consider whether the proceedings are likely to result in Quadriga’s liquidation or restructuring and whether the matter ought to continue being heard in court.

“My ultimate goal is to get the process concluded as efficiently as possible and with maximum recovery for stakeholders who have resources at risk,” he said.

Outside the courtroom, Mitch Airey, who drove four hours to Halifax from Fredericton, held placards criticizing the court process, which he said has given “legitimacy” to a business that showed signs of being in trouble for a year before it was shut down.

Story continues below advertisement

“They didn’t have the funds that they claimed to have,” he said, adding: “We need change in industry, perhaps regulation. For the betterment of Canadian crypto, this can’t happen again.”

Mr. Airey is calling for a police investigation into the missing funds.

A spokeswoman for the RCMP said the force “is aware of the allegations against QuadrigaCX.”

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Discussion loading ...

Cannabis pro newsletter