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The plot of cryptocurrency exchange QuadrigaCX thickens as the case unfolds in the Nova Scotia Supreme Court. The Exchange Management had decided to hold all the operation of Canada’s largest exchange since Jan 28 2019 to retrieve the funds stored in the cold wallet of their deceased CEO.
The case began with the affidavit by the Board of Directors and a ‘sworn’ statement by the wife of the deceased owner, Gerald Cotten. The affidavit and stay petition was filled by the Board of Directors on January 31 2019.
The Court had designated February 5 2019 as the date for Preliminary hearing. The Court had also assigned ‘Ernest and Young Inc.’ as an independent ‘Monitor’ to retrieve the funds of the cryptocurrency exchange’s users.
Ernst and Young Inc. has assigned a specialized team and encryption experts to examine the situation of the funds and retrieve the amounts. However, another misshapen took place with the funds just a day after the hearing when Ernst and Young reported that 103 more Bitcoins were lost due to an accident while inspecting the funds.
The court document states, "On February 6, 2019, QuadrigaCX inadvertently transferred 103 bitcoins valued at approximately $468,675 to Quadriga cold wallets which the Company is currently unable to access. The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible."
The Monitor has confiscated the Electronic devices that belonged to Gerald Cotton to retrieve the funds. The electronic devices included two active laptops; two older model laptops; two active cellphones; two dead cellphones; and three encrypted USB flash drives.
The funds held in the ‘hot’ wallets of the exchange amount to around $681,652. The court has ordered the ‘Monitor’ to manage the funds until the proceedings of the case. It is currently being held in a cold storage wallet of Ernst and Young Inc.
The Nova Scotia Supreme Court has also ordered to set up a ‘Disbursement Account’ and keep custody of the funds in hands. The funds also received $150,000 from Cotton’s wife as well.
Furthermore, the Court of Nova Scotia QuadrigaCX granted creditor protection to the Board of Directors and the Wife of Cotton. Hence, they are protected from all legal proceedings against the people and the exchange until Ernst & Young are able to investigate its financial situation.
The reports and findings of the case closely suggests that the chances of retrieval of the entire amount are bleak. Canadian lawyers will convene on February 14, 2019, in Halifax, Canada in a bid to represent some 111,000 users affected by the cryptocurrency exchange.