Bankrupt Canadian crypto exchange QuadrigaCX begins partial compensation for creditors – Cryptopolitan

Creditors of the defunct Canadian crypto exchange QuadrigaCX are set to receive a 13% interim dividend on their claims, as announced by accounting firm Ernst & Young (EY) in a recent notice. This marks a significant step in the ongoing bankruptcy proceedings, which have been underway since the exchange’s collapse in 2019.

EY’s documents reveal that Quadriga’s estate owes about CAD $303.1 million ($222.3 million) to 17,648 creditors, including Canada Post and the Canada Revenue Agency (CRA). Of these claims, 15 have a value greater than CAD $1 million, 28 are between CAD $500,000 and $999,999, and 15,236 are valued under CAD $10,000. The CRA determined that Quadriga failed to report income during its 2016-2018 fiscal periods, resulting in an additional $11.7 million owed in back taxes.

Distribution process and potential claim rejections

The interim dividend will be paid according to cryptocurrency values pegged at April 15, 2019, market prices. Users with Bitcoin claims will receive CAD $6,739.08 ($7,122.9) per BTC, while those with Ethereum claims will get CAD $223.45 ($299.45) per ether.

Miller Thomson, the law firm representing the creditors, suggested on May 8 that the interim dividends be distributed in the next few weeks. However, it’s worth noting that some creditors may face a rejection or reduction in their claims. In a notice posted on its website, Miller Thomson confirmed that Ernst & Young might issue a Notice of Disallowance of Claim for claims deemed “invalid, incorrect, or unsubstantiated.”

Creditors who receive such notices have the right to appeal the decision by submitting certain documents to the court, including the original proof of claim, reasons for disagreeing with the notice of appeal, and other supporting documents.

Furthermore, QuadrigaCX, once the largest crypto exchange in Canada, became insolvent in early 2019 following the unexpected death of its co-founder and CEO, Gerald Cotten. Also, Cotten was the sole custodian of the private keys to QuadrigaCX’s offline storage systems, and his passing left thousands of users in financial limbo.

After months of investigating assets, Ernst & Young announced that it could only recover $34.3 million worth of assets, a mere fraction of the $160 million owed to creditors. Also, the Ontario Securities Commission (OSC) supported this claim, stating, “We did not identify any other assets beyond those identified by Ernst & Young.”

The announcement of the 13% interim dividend represents a significant milestone for the creditors affected by QuadrigaCX’s downfall. As the legal process continues, many are hopeful that this initial payout will set the stage for further compensation in the future.