Canadian QuadrigaCX CEO Gerald Cotten was reportedly dead in December with a password that subjected customers of the crypto exchange to a loss of $196 million. Speculations surrounding the mysterious death have prompted conspiracy theories that Cotton may have staged his death.
Judge Michael Wood of Nova Scotia Supreme Court on appointed Canadian firms Miller Thomson and Cox & Palmer to represent the QuadrigaCX customers – about 115,000 of them. Wood ruled on Tuesday that the law firms would be appointed for the cause after deliberating the decision for about a week.
Miller Thomson and Cox & Palmer had vied to be up against fellow Canadian law firms Patterson/Osler, Hoskin & Harcourt and McInnes Cooper/Bennett Jones Law last week during a hearing in Halifax.
Judge Wood explained in his ruling that the appointed law firms have “extensive insolvency and [Companies’ Creditors Arrangement Act] experience,” with Miller Thomson familiar with proceedings related to cryptocurrencies. He also disclosed that proposal from the firms “was “thought out carefully with a view to minimizing costs.”
Due to a stay of proceedings granted earlier this month, the law firms will not be filing a class-action lawsuit immediately. However, they can begin now to prepare for any lawsuit in the future, with Miller Thomson already charged to collect information about potential creditors, including claim accounts and contact information.
March 5 is the scheduled date for the next court hearing on the progress made by both Quadriga and Ernst & Young (EY), the court-appointed monitor, in attempts to raise or recover the $196 million Quadriga owes its users. Meanwhile, the granted stay of proceedings will expire on 7th of March, according to the court filings.
Quadriga and EY could file for the stay’s extension, though it’s not clear if the filing will be approved by Judge Wood who may prefer to open up the floor to lawsuits in view that QuadrigaCX has already been given a lot of time.
The real situation surrounding QuadrigaCX customers
QuadrigaCX customers first got the hint of trouble when the company announced the death of its founder and CEO Gerald Cotton due to complications related to Crohn’s disease. They got the biggest shock after the crypto firm explained that no other person could access $136 million in cryptocurrency stored offline. Cotton was the only person with the private keys.
After filling for creditor protection, the crypto exchange was granted a 30-day stay on any proceedings so it could try to recover the cryptocurrencies it could not access, unlock additional $53 million in fiat still with payment processors and possibly sell itself.
As of Tuesday before the Supreme Court ruling, Quadriga had made no success in accessing the frozen crypto. Rather the exchange lost an additional 100 bitcoin while trying to remedy the situation. There was no explanation on how this happened but the exchange “inadvertently” sent the coins to cold wallets it cannot access, according to Coindesk.