Lawyers and representatives from auditing firm EY and various other personnel will be paid $1.6 million USD for their work dismantling QuadrigaCX, a Vancouver-based, Nova Scotia-administered crypto exchange that failed in January after the death of its founder in December.
According to the CBC, presiding Justice Darlene Jamieson said the case was complicated because Quadriga’s deceased CEO, Gerald Cotten, kept very poor records.
This was also Canada’s first case of cryptocurrency exchange insolvency.
According to a monitor’s report, EY contracted 18 outside experts to help with the dissolution.
The outlet writes that claims of lawyers representing an estimated 76 319 Quadriga CX customers who collectively lost approximately $190 million USD were also approved.
Toronto lawyers Miller Thompson received $340 000 CAD and Halifax’s Cox and Palmer were awarded $40 000 CAD.
All told, QuadrigaCX is believed to have been serving 363 000 customers at the time of its collapse.
EY only managed to locate about $25 million USD in total Quadriga assets during the course of its work.
Cotten’s widow, Jennifer Robertson, and personnel at Quadriga say Cotten died without leaving anyone else password access to almost $200 million USD in exchange funds they believe he was storing in “hardware wallets” (offline storage devices similar to thumb drives).
The story sparked outrage among users of the exchange and crypto users in general because such a practice constitutes a grievous violation of fiduciary responsibility and well-known cryptocurrency best practices.
Some have questioned whether Cotten even had the money at the time of his death, and a monitors’ report issued in June claimed that Cotten was running Quadriga virtually alone from his laptop in Nova Scotia, during which time he commingled customer funds with exchange funds and gambled them; faked user accounts and traded from them “resulting in inflated revenue figures;” and transferred exchange funds to his personal accounts.
Cotten’s widow has been forbidden from selling the couple’s assets in the couple’s estate, which are worth an estimated $12 million CAD.