The law firm that represents Quadriga Fintech Solutions Corp., the crypto exchange company that was left into rubbles after its CEO mysteriously died in 2018, is withdrawing and would no longer serve the infamous crypto exchange company after concerns of potential conflict of interest were raised.
The law firm, Stewart McKelvey, with offices across Atlantic Canada, was representing both Quadriga CX and the estates of its deceased Chief Executive Officer, Gerard Cotten, who mysteriously died in Indian soil and took with him digital assets of the company leaving the crypto exchange platform with massive debt from its users.
According to Maurice Chiasson, a lawyer at the firm’s Halifax office, through a letter sent to the Supreme Court of Nova Scotia on March 13, Ernst and Young Inc., the monitor nominated by the government to oversee all of Quadriga’s dealings under a court-approved creditor protection program, have noted concerns of potential conflict of interest. However, no details regarding what causes the conflict of interest have been disclosed.
“Notwithstanding that no information has been disclosed which provides a basis to conclude there has been or is the potential for conflict, we are of the view that the appropriate course in these circumstances is to withdraw from our representation,” effectively immediately, Chiasson said in the letter.
Nonetheless, the firm will continue to represent Cotten’s estate which remains to be under the possession of his widow, Jennifer Robertson, he added.
The Vancouver-based digital currency exchange company has faced multiple charges after Cotten has mysteriously died in December 2018, taking all digital assets – including passwords, encrypted codes, etc. – to his grave, leaving more than 115,000 customers affected.
ROBERTSON WANTS TO BE REPAID OF HER COSTS
Different reports regarding the estate’s management have shone some light on the possible conflict of interest that the firm is accused of that lead it to withdraw from representing the company.
Early this month, the widow of Quadriga CEO, wanted to be repaid of the money she spent to help the company in its legal troubles following Cotten’s death. Jennifer Robertson spent around $225,000 to support the shuttered crypto exchange company secure court-approved protection from creditors.
Robertson agreed to provide “interim financing” totaling C$300,000 to the estate – with more than half of that used for professional fees tied to filing the Companies’ Creditor Arrangement Act and appointing new directors for the firm according to a court document filed in January.
According to the latest report of Ernst and Young, Quadriga is poised to make a disbursement amounting to C$24.7 million at the direction of Quadriga to fund the proceedings. Quadriga is currently overseen by Robertson and her step-father Tom Beazley as directors.
A cash flow report signed by Robertson on March 1 projects C$1.1 million in disbursements from March 2 to March 8, including C$300,000 for “repayment of shareholder advances” as the most significant single amount. Other costs include C$200,000 for Ernst & Young and C$250,000 for its lawyers, C$229,842 for Quadriga’s law firm and C$17,000 for independent contractors.
During a court hearing on Tuesday in Halifax overseen by Nova Scotia Supreme Court Justice Michael Wood, the matter was discussed briefly but was deferred to another day. Wood agreed to extend the period of the company’s court protection until April 23 and appoint Peter Wedlake, a Senior Vice President and partner with Grant Thornton, as a chief restructuring officer for the firm.
However, a wave of protest came against the demand for Robertson to be repaid of her costs. “We are concerned about the repayment by the applicants of C$300,000 to Ms. Robertson in the first week of March contemplated by the filed cash flow projection,” Cox & Palmer partner Gavin D. F. MacDonald said in a March 4 letter.
The letter further notes that Cox & Palmer have requested information regarding assets and transactions from Stewart McKelvey and a consent agreement to preserve while it reviews the information.
“The repayment contemplated by the cash flow is inappropriate until such time as the monitor has reviewed the requested information and satisfied itself as to the source of funds used to fund the CCAA proceeding.”
These new reports are part of the latest twists to the story that have shocked the crypto world and have left many guessing on what really happened with Cotten and his company.