In its bid to avoid going bankrupt, QuadrigaCX is filling for protection from creditors. A statement posted on the Canadian Crypto exchange states that: “it has filed an application for creditor protection in accordance with the Companies’ Creditors Arrangement Act,” as part of a move to “address” financial issues.
QuadrigaCX is Buying Some Time
According to PwC, the act gives sinking companies the opportunity to rearrange the way it operates. The application filing is usually done in order to prevent bankruptcy and also provide creditors with the opportunity to “receive some form of payment.” under Canadian law.
However, QuadrigaCX has asked of the Nova Scotia Supreme Court to appoint Ernst and Young Services Firm as an independent third party and to review it’s court proceedings.
The statement continued by saying that:
“For the past weeks, we have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets, and that are required to satisfy customer cryptocurrency balances on deposit, as well as sourcing a financial institution to accept the bank drafts that are to be transferred to us. Unfortunately, these efforts have not been successful.”
Further updates from the court hearing which is expected to take place on the 5th of February will be released by the exchange.
QuadrigaCX Not in Possession of its Cold Wallets or Keys?
The whole issue began when the company’s clients started to complain that they were unable to make withdrawals in both virtual currencies and fiat.
The fiat withdrawal problems arose in part from a just-concluded legal battle against the Canadian Imperial Bank of Commerce which froze a large portion of the company’s funds last year.
Although it is still not clear why customers are having problems regarding Crypto withdrawals, a recently released statement implied that the company is currently not in possession of its cold wallets or keys.