Illustration by Freepik

This week, Ernst & Young, the bankruptcy monitor of the failed QuadrigaCX exchange, published a document stating that 16,959 claims have been filed by former users over the course of last year. Affected clients claim capital in bitcoin (BTC), bitcoin cash (BCH), bitcoin SV (BSV), bitcoin gold (BTG), litecoin (LTC), ethereum (ETH), USD and Canadian dollars (CDN). The reported number is based on claims as of May 6, 2020.

Initially, Ernst & Young announced that it will process claims filed until August 31, but as there is no functional deadline, claims are still acknowledged. Nevertheless, the service company noted that “the volume of new claim submissions has slowed considerably” and explained that all assets will be converted to their amount in Canadian dollars, before being distributed. 

Here are the exact numbers of the claims:  

AssetNumber of claimsCrypto units or fiat currency
Bitcoin SV2,9127,093.4818
Bitcoin Cash3,0037,718.4992
Bitcoin Gold2,56418,031.2131

Ernst & Young is overseeing the management of QuadrigaCX since Feb. 5, 2019, which was just days after the exchange, trying to survive, filed for civil rehabilitation. If we calculate the lost assets by their February 2019 prices, the Canadian dollar equivalent would be $234 million or $167 million USD. But, if we calculate by the current crypto prices, the amount would be twice as big – $431 million CDN (USD 307 million). Unfortunately, when users should expect their funds to be restored is still unknown, as no timeline has been provided.

The auditor commented that not all claims are verified yet, as some of them have technical deficiencies, values that are different from the Quadriga papers, and other small errors. Of course, EY is trying to resolve these dissimilarities. 

Miller Thomson, the court-appointed law company representing Quadriga’s users, published a note stating that Canada’s tax collector had to file a claim prior to the distribution of funds. 

As the note reads:

“As Quadriga failed to file tax returns in the ordinary course of business, the determination of a Canada Revenue Agency tax claim against Quadriga is necessary prior to the Trustee declaring any distribution to Affected Users or creditors generally, as tax claims rank [on equal footing] with the unsecured claims of Affected Users.”

Although Ernst & Young has permission from the court to send documents to the Canada Revenue Agency, according to the document, the procedure has still not been completed. This means that Canada’s tax collector hasn’t started with the audit.

In 2019 the situation went for the worse for QuadrigaCX, when founder and CEO Gerald Cotten was found dead. The exchange went into bankruptcy as he maintained all private keys and systems. 

In addition, EY discovered that Gerald Cotten utilized user funds to margin trade small-cap cryptocurrencies. He even bought luxury goods and even a private plane with the money coming from his customers. 

These findings do raise the question of whether Cotten is indeed dead or this is just part of some huge scam. Former users of the exchange request that the body be exhumed but the Royal Canadian Mounted Police has not yet responded.