Ernst and Young has released a third report following the creditor protection proceedings of QuadrigaCX. The report revealed Quadriga’s Blockchain addresses as well as empty offline Bitcoin wallets.
EY’s third report outlines its progress made since appointment as the monitor. The auditors’ previous reports have offered few answers to the case. But, for the first time, EY has identified six cold wallet addresses used by Quadriga.
Ernst and Young is the court-appointed audit firm overseeing the QuadrigaCX’s creditor protection process. The insolvent trading platform announced in an affidavit on January 31st that it owes approximately $190 million.
The cryptocurrencies the company owed its users became inaccessible after the death of the company’s founder and CEO, Gerald Cotton. Reports state that the deceased kept a bulk of the holdings in cold wallets that only he had control.
Making progress in a high profile search
Reports show that Internet Sleuths (a group of independent researchers) identified five of those wallets. The researchers found 103 BTC deposited in those five wallets. The amount was the same as that mentioned in QuadrigaCX’s report. The addresses had not seen any transaction since April last year.
Additionally, there was another 104 BTC moved by accident to one of Quadriga’s cold wallets. The EY confirmed this transaction to be a “platform setting error by the applicants..”
There were no Bitcoins in the sixth wallet address but, a recent transfer of 31 BTC to the sixth wallet made on Dec 3rd. This transfer has raised question since the transaction was made just a few days before the death of the exchange’s CEO.
Zero deposits since April
As of now, QuadrigaCX and its affiliated companies are unable to explain the dormancy of the addresses since April.
According to the report:
The Monitor has made inquiries of the Applicants as to the reason for the lack of cryptocurrency reserves in the Identified Bitcoin Cold Wallets since April 2018. To date, the Applicants have been unable to identify a reason why Quadriga may have stopped using the Identified Bitcoin Cold Wallets for deposits in April 2018; however, the Monitor and Management will continue to review the Quadriga database to obtain further information.
Furthermore, the monitor also identified 14 user accounts on QuadrigaCX platform. These accounts were created using some aliases, did not comply with Quadriga’s normal processes.
Most significantly, the accounts were created internally on the platform without “corresponding customers”.
The monitor’s report also revealed that there is a chance that the accounts were used to trade on the platform. The 14 accounts show a significant volume of transnational data. Included in the data were cryptocurrency withdrawals to private wallet addresses.
At the moment, Quadriga is pushing to appoint a chief of restructuring officer. The company is also calling for an extension to its creditor protection proceedings. The ailing crypto exchange is proposing an extension from 45 days to 60 days. EY has agreed to its request deeming it “appropriate.”
However, Miller Thomson and Cox & Palmer, the two Canadian law firms representing the exchange’s creditors oppose the extension. They are requesting the court to give a 30-day extension instead.
In a separate notice issued by Miller Thomson, the law firm made a call for applicants looking to serve on the affected user’s committee. Other creditors who do not want to be represented by the two law firms can fill a separate form to opt out by April 29.
Do you think the Quadriga creditors will get back their funds? Will the missing cryptocurrencies ever be found? Share your opinion with us in the comments section.