The widow of Gerald Cotten, the late founder of QuadrigaCX, has reached a settlement to transfer “nearly all" of her assets to the trustee overseeing the cryptocurrency exchange’s bankruptcy.
Ernst & Young said in a report released on Monday that Jennifer Robertson has agreed to hand over about $12-million in assets, including real estate properties, a boat and a Cessna 400 airplane. The trustee said it plans to sell the assets and pay the funds to the exchange’s users, who are collectively owed $214.6 million in cash and cryptocurrency.
“This settlement will allow me to move on with the next chapter of my life,” Ms. Robertson said in a statement on Monday.
The settlement, which is pending approval by an Ontario court, is preferable to costly litigation that would eat into the amount of money available, Ernst & Young said.
Quadriga, once Canada’s largest cryptocurrency exchange, was shuttered earlier this year after the sudden death of its 30-year-old chief executive officer and sole director. Mr. Cotten died of complications from Crohn’s disease last December in India on his honeymoon. Since then, about 76,000 of the exchange’s users haven’t been able to access their money.
Mr. Cotten did not appear to keep funds belonging to Quadriga’s customers in separate accounts, and made “substantial” transfers to his own personal accounts, Ernst & Young said. Only Mr. Cotten knew the passwords to access the cryptocurrency holdings. Ernst & Young has recovered $33-million to date.
The couple, who travelled extensively, used funds from Quadriga to buy real estate and support their lifestyle, Ernst & Young said. They had no material income aside from the company.
The settlement includes not only Ms. Robertson’s personal assets, but also those held by companies she controls and Mr. Cotten’s estate.
“Under the settlement agreement, the Quadriga estate will acquire nearly all of the assets currently owned by Ms. Robertson, the estate and the controlled entities,” a court document said. Ms. Robertson’s stepfather, Thomas Beazley, will also transfer to Ernst & Young any assets he bought with money that came from Quadriga, including a 2017 Toyota Tacoma truck.
Ms. Robertson will get to keep her clothing and personal items, her wedding band (worth $8,700) and a 2015 Jeep Cherokee. She will also hold on to about $90,000 in cash, a $20,000 Registered Retirement Savings Plan and her shares of the company. She will have to vacate her home in Fall River, N.S., by the end of the month.
Ms. Robertson said in the statement she was unaware of Mr. Cotten’s “improper actions” in managing the company’s finances, and had believed the assets they acquired were bought with money Mr. Cotten had legitimately earned through profits, a salary and dividend payments.
“I was upset and disappointed with Gerry’s activities as uncovered by the investigation when I first learned of them, and continue to be as we conclude this settlement," Ms. Robertson said in the statement.
Ms. Robertson said she has made “every effort” to help recover Quadriga’s assets, has been helpful and co-operative with Ernst & Young, and that she believes the settlement is a “fair and equitable resolution” for the exchange’s users.
In addition to Ms. Robertson and Ernst & Young, the parties recommending the settlement be approved include Mr. Beazley and the official committee representing QuadrigaCX’s users.
Several agencies and regulatory bodies are investigating Quadriga, including the Ontario Securities Commission, the RCMP and the U.S. Federal Bureau of Investigation. The Canada Revenue Agency is auditing the company’s tax returns.
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