Ernst & Young disputes that Crypto Exchange QuadrigaCX should go into bankruptcy

The Big Four accounting firm Ernst & Young (EY) has argued that the Canadian crypto-exchange QuadrigaCX, which is now hidden, should be placed in bankruptcy instead of being restructured as part of ongoing credit protection procedures. EY presented the course of action in his "Fourth Monitor Report", filed with the Nova Scotia Supreme Court on April 1.

As previously reported, QuadrigaCX reported that after the death of its founder Gerald Cotten in December 2018, it no longer had access to its cold wallet wallet – because Cotten was apparently the only person with access to the corresponding wallet keys.

With the allegedly inaccessible crypto accounting for the vast majority of the exchange's assets, QuadrigaCX owes more than $ 198.4 million to an estimated 115,000 users. QuadrigaCX applied for protection as a creditor in early February, with EY being designated as the supervisor of the proceedings.

In the auditor's Fourth Report as Case Monitor, the EY Legal Team argues that the ongoing restructuring process for QuadrigaCX should be shifted to an alternative process under the Bankruptcy and Crime Act according to the Companies & Creditors Arrangement Act (CCAA). Insolvency Act (BIA). The authors propose:

"Given the current circumstances, the possibility that Quadriga will restructure and come out of CCAA protection appears at a distance. The ongoing investigation into locating and recovering assets for distribution to creditors with a view to optimizing recoveries for the stakeholders of the applicants can be managed efficiently in a procedure under the BIA. "

The benefits of a shift to litigation under the BIA, the report argues, include the fact that bankruptcy "enables the potential sale of assets, including but not limited to Quadriga's operational platform," as well as streamlining administrative burdens and reducing procedural costs.

In addition, the report states that the transition to BIA EY would provide "increased investigative powers" in its future role as bankruptcy trustee for the exchange. The trustee, appointed for Quadriga CX and Quadriga Coin Exchange, would also tackle seemingly administrative issues by eliminating the need for a chief restructuring officer or directors.

BIA proceedings would remove the burden of proof of formal court updates – as currently required by CCAA – with the trustee providing prospective reports directly to affected users during the bankruptcy.

The EY report further explains its ongoing investigations into the missing funds of QuadrigaCX, with reference to various external payment processors currently holding fiat currencies in Quadriga's name.

EY has also submitted an Asset Preservation Order application – which would include all assets held by the Cotten estate, his spouse and others – because of his concern that "the business and personal boundaries between Quadriga and the founder Gerald Cotten were not formally maintained. "

As previously reported, EY & # 39; s latest report was published in March, with details about the auditor's ongoing investigations into portfolios and transactions related to the exchange.

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