A recent Reuters reports notes that the QuadrigaCX, the Canadian cryptocurrency exchange which is going through some troubled times was not regulated by Canada’s financial regulator, British Columbia Securities Commission (BCSC).
Established in 2013, QuadrigaCX was purportedly the first exchange in Canada to be licensed by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
As reported by Reuters on Feb. 7, the BCSC was aware of the Vancouver-based cryptocurrency exchange since 2017. However, the exchange remained unregulated as the regulator reportedly found no indication the Quadriga traded securities or derivatives or operated as an exchange in general. BCSC spokesman Brian Kladko reportedly told Reuters, “As such, BCSC does not regulate it.”
The Troubled exchange
Following the sudden death of its 30-year-old founder Gerald Cotten, at the beginning of February 2018, it was reported that the exchange was missing CA$190 million dollars ($145 million) in digital assets.
Since Cotten was solely responsible for the wallets and corresponding keys, the exchange hasn’t been able to access its cold wallets, where most of its assets were kept. Recent news suggests that Cotten filed a will mere 12 days before his death and named his wife Jennifer Robertson, as the only beneficiary and the executor to his estate.
Cotten’s death and the subsequent news have sparked controversy in the crypto community. Many customers claim that the company’s founder is faking his death in order to steal their assets. However, the Government of Rajasthan’s Directorate of Economics and Statistics has issued a death certificate that unveils that Gerald William Cotten died on Dec. 9.
Responding to such accusations, Robertson has reportedly stated in an affidavit :
“I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.” She added “there have also been threats made against [her].”
In addition to this supposed drama, Quadriga also experienced difficulties accessing $21.6 million of its funds as the Canadian Imperial Bank of Commerce (CIBC) froze five accounts that belonged to the exchange’s payment processor, Costodian Inc., and its owner, Jose Reyes.
The accounts were frozen on the due to an inability to identify the funds’ owners. While the company filed a case against CIBC, judge Glenn Hainey of the Ontario Superior Court subsequently ruled in favor of the bank, agreeing that the owner of the funds was not clearly established. According to the ruling CIBC has now passed the funds over to the Accountant of the Superior Court, so the court could identify the owner.