QuadrigaCX, the Canadian crypto exchange that collapsed after the death of its CEO and founder late last year, has just $21m in assets, but owes creditors $160m, an investigation by Ernst and Young revealed.
After three months of investigating, the accounting firm has issued a trustee's preliminary report saying it may not be possible to complete a full review of QuadrigaCX's finances, mainly because of the company's poor bookkeeping. So far it has found just $21m in assets, virtually all of it in cash.
The report says the investigation has been hampered by some of QuadrigaCX's unco-operative business partners and the sheer volume of the transactions it processed since it was founded in 2013 by Gerald Cotten.
These transactions measure in the millions"
"These transactions measure in the millions," George Kinsman, a senior vice-president with Ernst and Young in Halifax, said.
The accounting firm says that as of last month, QuadrigaCX and its associated holding companies owed 76,000 creditors a total of $160m.
In April this year, Nova Scotia Supreme Court Judge, Justice Michael Wood, declared Quadriga to be bankrupt. The official pronouncement followed a recommendation from EY advising that the collapsed exchange's proceedings be moved from creditor protection to bankruptcy proceedings.
EY noted at the time that declaring bankruptcy was in the best interests of the creditors as it allowed for the sale of would-be assets, "including but not limited to Quadriga's operating platform."
It would also help streamline administrative burdens as well as considerably cut costs related to the process.
The online exchange, which was once one of the largest in Canada, offered an unregulated platform for users to store and trade digital assets like Bitcoin, Litecoin and Ethereum. Troubles for Quadriga surfaced publicly after the sudden death of its co-founder and CEO.
The exchange was shut down in January 2019 amid speculation after Cotten allegedly died from complications of Crohn's disease while travelling in India on Dec. 9.
The entire enterprise was thrown into a tailspin when it was revealed Cotten was the only person who knew the passwords to gain access to the company's offline cryptocurrency reserves.
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