Crypto Exchange Mystery Deepens as Board Seeks Court Protection

(Bloomberg) -- The issues at cryptocurrency exchange QuadrigaCX keep getting more complicated.

The Vancouver-based company’s board of directors said Thursday it filed for creditor protection in a Nova Scotia court to gain time to address “significant financial issues" affecting their ability to serve customers, according to a statement on its website. A hearing is scheduled Feb. 5.

“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," the firm said. “Unfortunately, these efforts have not been successful."

The statement comes two weeks after QuadrigaCX tweeted of the “sudden passing" of its founder and Chief Executive Officer Gerry Cotten, who it called "a visionary leader who transformed the lives of those around him.”

QuadrigaCX was involved last year in a legal dispute with Canadian Imperial Bank of Commerce over about C$26 million ($19.8 million) in cryptocurrency transactions.

All of this has raised speculation on Reddit’s online forums, where posters are wondering aloud if the business was a scam, calling for class-action lawsuits and even concocting conspiracy theories that call into question whether the CEO is even deceased.

Emails and calls to the company weren’t immediately returned.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Jacqueline Thorpe

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