17,000 Users of Defunct QuadrigaCX Exchange File Claims Worth $300 Million

Tens of thousands of ex QuadrigaCX users have filed claims against the now-defunct crypto exchange. Lawyer says any disputes could see protracted cases as seen with Mt. Gox, which collapsed in 2014

QuadrigaCX bankruptcy case trustee, Ernst & Young (EY), have said that close to 17,000 people have filed claims for refunds from the defunct exchange’s assets. 

The trustee said that over the last 12 months, 16,959 claims had been received, with claimants looking to recoup some of their money in assets ranging from Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC). 

Others are the top BTC forks in Bitcoin cash (BCH), Bitcoin SV (BSV) and Bitcoin Gold (BTG). Users also want the court-appointed monitor to help them recover lost deposits in both USD and the Canadian dollar (CAD).

According to a document EY published May 12, the total value of the claims could end up somewhere between $167 million and $300 million.

Calculations for the total claims take into account proofs of claims users filed up to May 6, 2020. Ernst & Young had given the defunct crypto exchange’s users up to August 31 to file claims, but stated in the report that it is open to new claims even past the deadline.

The company said that it expects to convert all the funds it would have to distribute into CAD, or equivalent currencies. However, the firm hasn’t stated how the valuation would happen.

QuadrigaCX claims might take time

Although EY has received the claims and might move with speed to help the victims, it is likely it will be months or years before the users begin to receive any payouts.

Speaking at CoinDesk’s Consensus Distributed, bankruptcy lawyer Evan Thomas pointed to the infamous Mt. Gox Bitcoin exchange that went bust in 2014. He noted that the case involving the defunct Tokyo-based exchange has dragged into “its sixth year.”

According to Thomas, one of the things that could delay the process relates to if the Canadian Revenue Agency (CRA) filed for unpaid taxes. Any battle in court between the users and the tax body could see the distribution of recovered assets delayed for whatever time it takes to resolve the dispute.

And as QuadrigaCX victims’ representative, law firm Miller Thomson pointed out in a letter written on Tuesday that the Canadian tax agency will have to file its claim before any of the recovered money is given to the former QuadrigaCX users.

The CRA is to begin auditing the collapsed exchange’s books and it is expected it will file a claim for unpaid taxes.

Another problem could arise if a user or group of users comes forth to dispute the distribution on the basis that what they are being given is less than what the trustee says they should receive. Like in the above case, a long tussle could cause further delays, Thomas added.

QuadrigaCX filed for bankruptcy in January 2019, after its founder and CEO Gerald Cotten, who reportedly held sole custody of the exchange’s private keys, suddenly died while in India.

EY took over as a trustee later in February. At the time, users were said to have lost funds – in crypto – amounting to about $167 million at the then-prevailing BTC prices. If the distribution takes into account Bitcoin’s price today, it would come to about $300 million. EY has managed to recover about $30 million worth of the assets, mainly from third-party firms that conducted business with QuadrigaCX.