Creditors of the bankrupt Canadian crypto exchange QuadrigaCX will soon receive 13% of their claim. This is part of an “interim dividend” from the platform’s bankruptcy trustees, Ernst & Young (EY). 17,648 creditors with a proven claim will get back a fraction of their investments. It is valued at the prices of April 15th, 2019.
What happened to QuadrigaCX?
QuadrigaCX was the largest cryptocurrency exchange in Canada up until early 2019, when it suddenly declared bankruptcy. Gerald Cotten, Quadriga’s CEO, stored its private keys offline as the sole manager. After Cotten suddenly passed away in India, the private keys went with him, as did any chance of restoring the exchange and repaying creditors.
What do Creditors Get Back?
Creditors with a proven claim will receive 13.094156% of their proven claim less the levy amount payable to the Office of the Superintendent of Bankruptcy pursuant to the BIA. The crypto’s value on April 15th, 2019 converts each creditor’s claim into monetary terms. (Felbatol)
For example, claimants who held Bitcoin at the time of the collapse will get a payout of 6,739 Canadian dollars ($4,933) per BTC. Claims for Ethereum will be paid out at 223.45 CAD/ETH. Calculators estimated the values when Bitcoin sold for around $6,700 and Ethereum for around $150.
What is the Value of QuadrigaCX’s Assets?
Initial estimates by EY have valued QuadrigaCX’s total assets at 303.1 million Canadian dollars ($223 million). However, the Canada Revenue Agency (CRA) determined that the exchange had not reported income during the 2016 to 2018 fiscal period, resulting in owed back taxes of $11.7 million. We must see if QuadrigaCX can pay this back along with its creditors’ claims.
Are There Any Parallels to FTX?
There are many parallels between the QuadrigaCX and FTX cases. Allegations of criminal wrongdoing at the highest level, crypto assets that seemingly disappeared, and a string of overlapping law enforcement investigations are but a few of the common strands.
FTX users will be watching the resolution of Quadriga’s bankruptcy case closely, in the hope that their assets won’t suffer the same devaluation online speculators experienced at Quadriga.
Conclusion
The resolution of QuadrigaCX’s bankruptcy case is an important turning point for the future of crypto trading in Canada. Many creditors of the collapsed QuadrigaCX, numbering 17,648, will be delighted to get a portion of their money back, but many have seen the value of their crypto holdings soar since then. Unfortunately, the crypto payout will be based on the April 15th, 2019 prices, leading to devaluation in many cases. Lastly, FTX users will now be waiting to see if their claims suffer the same devaluation as Quadriga’s creditors.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
