Thread by @Crypto_Mags

The biggest Canadian #crypto story is the downfall of one of Canada’s largest #cryptocurrency exchanges @QuadrigaCoinEx

The untangling of this case will set major legal precedents for Canada & influence regs & the future operations of #fintech & crypto firms

Highlights ⬇️
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KEY @QuadrigaCoinEx STATS:

THE 💰
$250M total cash & #crypto owed to users
$180M missing #cryptocurrency 💸
$70M fiat owed to users; $25.7M frozen by @cibc & currently unbankable

THE CUSTOMERS
115k users owed 💰
Largest user owed $70m 🐳

Sources: EY ey.com/ca/quadriga
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THE LATEST:

EY appointed Court Monitor – will oversee QCX restructuring, investigate missing #crypto & secure funds/records

@QuadrigaCoinEx under CCAA creditor protection for 30 days (no one can sue for 30 days)

Motion to appoint representative counsel for creditors: Feb 14
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🚨 IF YOU LOST $ 🚨
You can reach out to one of the 3 legal firms seeking appointment as representative counsel for all creditors:
@Osler_Law
@MillerThomson
@BennettJonesLaw

They’ll ask for:
-Name, email & QCX #
-Amount & value of #crypto on QCX
-Approval of their appointment
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The @QuadrigaCoinEx aftermath has put a spotlight on their ops

While its activities could lead to enforcement action, they'll likely inform future regs, standards & industry-led best practices for exchanges/ custodians

Deep-dive of QCX ops ⬇️ (Source ey.com/ca/quadriga)
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QCX OPERATIONS:

Inadequate succession planning lies at the heart of this case:

The Founder Cotton was sole director of @QuadrigaCoinEx. Most business was done on his encrypted PC – only he had access

Cotton manually moved #crypto b/w cold & hot wallets – only he had access
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FIN. ISSUES:
QCX accounting records are a hodgepodge & biz activities led to liquidity/solvency issues:
-3rd party payment processors were used b/c of banking challenges
-Payment instructions given by email
-3rd party co-mingled QCX funds w theirs
-CIBC froze $ due 2 overdraft
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FROZEN $:

@cibc froze $25.7M in a 3rd party account, which led to signif. withdrawal delays - Cotton said to have advanced his own $ to customers

While a court order unfroze funds, QCX was unable to find a bank to accept bank drafts

Add'l bank drafts (pic) await in trust
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RESOURCES @QuadrigaCoinEx:

Official Court Monitor docs: ey.com/ca/quadriga

t.me/quadrigamonitor
⬆️Great informal Telegram channel w/ a huge archive:
-Court proceedings & law firm updates
-Active Reddit & Telegram groups
-Un/official docs
-#crypto/#blockchain analysis
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I just published 'The Death of a Canadian Crypto Legacy – QuadrigaCX' link.medium.com/P9ap8JOudU

In this article (based on this tweetstorm), I break down what went wrong w/ @QuadrigaCoinEx & ruminate on potential impacts on Canada's #crypto, #blockchain & #fintech sectors