Canadian cryptocurrency exchange QuadrigaCX loses access to its wallets

The Canadian cryptocurrency exchange QuadrigaCX has lost control of its wallets leaving their customers worried as the troubles for the exchange continues, as indicated by a notice from QuadrigaCX’s board of directors.

Customers became anxious a few days ago when the exchange went offline citing maintenance issues, however, the recent report indicates that the trouble is deeper than it seems.

The board said that there are “significant financial issues,” brewing and hence the exchange has not been operating efficiently off late. Further legal oversight has been piled onto the exchange with the Nova Scotia Supreme Court appointing the global audit giant Ernst & Young Inc. as an independent third party to supervise the creditor protection that will take place next month.

Liquidity is also addressed by the board that is adversely affecting the exchange’s performance, with the cold wallets problem piling onto the same. The notice stated:

“For the past weeks, 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.”

QuadrigaCX will intimate its customers regarding the further proceedings after a hearing on February 5. The exchange has around $500,000 in exchange volume in different trading pairs in the past 24 hours and hence the impact will not be hard-felt on the rest of the market.

Earlier in October, QuadrigaCX had accused the Canadian Imperial Bank of Commerce [CIBC] of withholding and preventing ease of access to the exchange’s funds worth $21.6 million. CIBC froze five accounts under the name Costodian Inc, the exchange’s payment partner. The bank cited discrepancies regarding the identity of the users as the main reason for the freeze.

In November, the exchange had $26 million of its funds seized by the Ontario Superior Court of Justice on an “interpleader order” with the funds put on hold until the rightful owner of the same is determined. The two parties in question are the exchange and its payment partner, Costodian.

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