A new steering committee has been appointed by Canadian law firms Miller Thomson and Cox & Palmer to guide the unfortunate customers of the failed cryptocurrency exchange company, QuadrigaCX, in their legal battles to recover their investments and cryptocurrency balance from the crypto exchange. The committee will potentially represent around 115,000 customers.
The Canadian law firms filed a court notice on March 19 and posted the said information online last Wednesday. Miller Thomson announced that it had selected its Official Committee of Affected Users. The committee that covers QuadrigaCX’s former customers who are affected by its financial problem will guide the law firm’s work as Quadriga and its court-appointed monitor, Ernst & Young (EY), try to recover the exchange’s multi-million dollar funds that were missing following the mysterious death of Quadriga’s CEO last December.
The online startup that handles cryptocurrencies of thousands of its clients cannot retrieve $145 million worth of digital money in Bitcoin, Litecoin, Ether, and other digital tokens. The company also said that the Vancouver-based QuadrigaCX could not pay C$ 70 million it owes.
QuadrigaCX’s directors posted a notice on the firm’s website on Jan. 31 that it was asking the Nova Scotia court for creditor protection while they address “significant financial issues” affecting their ability to serve customers.
“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,” the firm wrote.
The access to QuadrigaCX digital ‘wallets’ was lost after the passing of the company’s Chief Executive Officer, Gerald Cotten, who died December 9 in India due to complications from Crohn’s disease at the age of 30.
According to the legal filing by Miller Thompson, Parham Pakjou, David Ballagh, Eric Bachour, Ryan Kneer, Magdalena Gronowska, Eric Stevens and Nicolas Deziel have been appointed to the committee, with Richard Kagerer and Marian Drumea assigned as alternates. Both Nova Scotia Supreme Court Judge Michael Wood, who is overseeing the case, and EY have signed off on the committee and alternates.
Notably, Bachour has experience with another distressed exchange where funds went missing, as a former customer of the long-defunct Mt Gox, according to Tuesday’s filing:
“Bachour is also a creditor of Mt. Gox in 2013 and has direct experience with arbitrage and market trading in cryptocurrency. Through the Mt. Gox process he gained exposure to the legal side of bankruptcy and insolvency.”
As the fight of the former Quadriga customers to recover their lost funds, the committee is set to ‘provide input and direction’ to Miller Thompson and Cox & Palmer. The new steering committee will be specifically tasked with communicating or responding to communications from other Quadriga creditors, reviewing court documents and other materials filed by the representative legal counsel and other relevant tasks. Ultimately, the committee’s goal is to help lawyers fight for the lost money of Quadriga’s former customers.
RESIGNATION OF QUADRIGACX’S LAWYERS
The creation of the steering committee followed the resignation of the law firm that represents the company. The law firm 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 QuadrigaCX and the estates of its deceased Chief Executive Officer, Gerard Cotten.
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.
As of posting, around 960 customers have reached out to the law firms to ask for help to claim for their losses.