The ‘QuadrigaCx’ Predicament Is Improbable In Bermuda, Says Premier Edward David Burt

We have rules regarding the custody of the master key.

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Edward David Burt Premier of Bermuda
Photo: Foreign and Commonwealth Office/Wikimedia/CC BY 2.0

The world of cryptocurrency was shocked after the now-infamous tale of how the crypto exchange company QuadrigaCX now owes 115,000 users after the CEO of the company have mysteriously died. But the leader of Bermuda, a North Atlantic country, said that the infamous tale would not have happened if the crypto exchange company was based in his country.

Edward David Burt, Bermuda’s Premier and leader of the Progressive Labour Party, said that his country has special laws in securing encrypted keys and prides to have protected the users of the said crypto exchange better if QuadrigaCx has been based out of Bermuda.

“If Quadriga were licensed under the Bermuda Monetary Authority, what has happened would not have been able to happen, because we have rules regarding the custody of master keys and making sure they’re not held by a particular individual,” Burt said.

The North Atlantic country of Bermuda has been campaigning and advertising itself as a crypto tech haven in recent years. They have passed the Digital Asset Business Act in July 2018 and attempted to build a financial technology sector as part of their efforts to lure in more tech companies to base their operations in their country.

According to Burt, the special law specifically made for crypto users and service providers aims to improve the regulatory framework around initial coin offerings (ICOs).

“It states what you have to do with the master keys, how those things have to be handled and making sure that they cannot be lost, or if they are lost, there’s a way for that recovery to happen.”

Several crypto companies and blockchain tech providers have recently moved to the island country following the government’s enthusiasm to build a safe sanctuary for them. As of today, 74 fintech companies were incorporated in Bermuda, including Omega Dark, the country’s first cryptocurrency exchange and a compliance-focused subsidiary of Binance.

While the country is very eager to take in crypto companies in its economy, the leader said that companies will have to clear a “very stringent test,” in order to prevent what happened to Quadriga CX, which he called a collateral damage to a country’s regulatory framework, due to the misgivings of a single company’s “cross-contamination.”

Read More: A $200 MILLION PROBLEM: CRYPTOCURRENCY CEO TOOK DIGITAL ASSETS TO HIS GRAVE

“We recognize that any reputational damage from scams or otherwise can have an impact on our traditional financial services sector.”

The QuadrigaCx debacle has been a source of many questions from both its customers and the rest of the cryptocurrency industry as to what had happened to the almost $200 million funds that the company now owes from its customers.

The Federal Bureau of Investigation (FBI) and the Royal Canadian Mounted Police (RCMP) are looking into the implosion if QuadrigaCx after almost $200 million of funds went missing following the death of its CEO Gerard Cotten.

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.

Read More: A $200 MILLION AND MORE PROBLEM: FBI, RCMP, AND OTHER CRYPTO EXCHANGES INVESTIGATES QUADRIGACX

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.

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 QuadrigaCx, to avoid being hacked, a usual technique to take over digital companies, Cotten moved “majority” of the digital coins owned by the company to cold storage, said by widow Jennifer Robertson, in a court affidavit.

Although efforts to hack in the encrypted past life of Cotten were made, reports show that success has been very “limited.”

A new steering committee has been appointed by Canadian law firms 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.

Read More: SPECIAL COMMITTEE FORMED TO ASSIST QUADRIGACX CUSTOMERS TO CLAIM LOSSES

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.

As techno currency and the online economy flourish, one could hope to see more countries embracing the future and creating their own economy conducive for blockchain and crypto tech.

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