Canadian cryptocurrency exchange QuadrigaCX is not regulated by the British Columbia Securities Commission (BCSC), the province's financial regulator, Reuters reported, as the crypto firm founder's death has left millions of dollars in cryptocurrencies locked.
According to Reuters, the BCSC was aware of Quadriga since 2017. However, the exchange was unregulated as there was reportedly no indication that Quadriga traded securities or derivatives, or operated as an exchange in general. "As such, BCSC does not regulate it," a BCSC spokesman Brian Kladko told Reuters.
In the beginning of February — following the sudden death of its 30-year-old founder Gerald Cotten — it was reported that QuadrigaCX is missing CA$190m ($145m) in digital assets.
The Canadian Securities Administrators, an umbrella group, published an investor alert last June urging Canadians to be cautious when considering buying crypto assets through trading platforms. The alert said a platform may call itself an "exchange," but it may not be selling or trading securities or derivatives and, if such is the case, it will generally not be subject to regulation under securities or derivatives laws.
Those looking for recourse cannot turn to the courts just yet. Quadriga CX was given creditor protection this week in Nova Scotia Supreme Court, essentially halting any legal claims against it while the firm gets onto firmer financial footing. Cotten, who essentially operated the exchange from his laptop computer, resided near Halifax, Nova Scotia.
QuadrigaCX has not been able to access its cold wallets, where the exchange kept most its assets, as Cotten was solely responsible for the wallets and corresponding keys. News recently broke that Cotten filed a will 12 days before his death, where he mentioned his wife, Jennifer Robertson, as the only beneficiary and the executor to his estate.
Cotten's death sparked controversy in the crypto community, with some customers claiming he faked his death to steal their assets. However, later a death certificate, issued by the Government of Rajasthan's Directorate of Economics and Statistics, was unveiled, which stated that Gerald William Cotten died on Dec. 9.
According to Fortis Escorts Hospital, Cotten succumbed to a heart attack on December 9 last year. The Fortis Escorts Hospital is located in Jaipur, the capital of the northern Indian state of Rajasthan.
Per the Times of India, Cotten was declared dead in the evening at 7.26 PM. Cotten had also been suffering from Crohn's disease, an inflammatory bowel disease which can sometimes cause life-threatening complications.
According to documents availed by the hospital, Cotten was admitted to the healthcare facility on December 8. He was complaining of vomiting, watery stools and crampy abdominal pain. Additionally, he was also feeling feverish. Doctors diagnosed "septic shock, perforation, peritonitis, intestinal obstruction" upon admission. Cotten was in the company of Jennifer Kathleen Margaret Robertson, his wife, when he was admitted.
The next day after being declared dead, police in Jaipur handed Robertson a no objection certificate - a document allowing the collection and transportation of a body - allowing her to fly Cotton's body to Nova Scotia, Canada.
Despite the best efforts of the hospital, it is not certain that this will quell speculation regarding the Canadian crypto exchange. A cryptocurrency researcher has revealed that he found no evidence that QuadrigaCX even had a cold wallet.
Earlier last year, Quadriga was experiencing difficulties accessing CA$21.6m of its funds, when the Canadian Imperial Bank of Commerce (CIBC) froze five accounts belonging to the exchange's payment processor, Costodian Inc., and its owner, Jose Reyes. The bank purportedly froze the accounts due to an inability to identify the funds' owners.