Major Canadian cryptocurrency exchange QuadrigaCX was in the news last month when it’s CEO died suddenly, taking with him the only private keys to $190 million in client assets.
However, since then the case has become quite convoluted, with follow up research from the Wall Street Journal suggesting the funds may have been moved before the mysterious death.
The case is being overseen by lawyers from the Bank of Montreal and Ernst and Young who believe there is a potential threat of money-laundering since the exact location of the funds are now uncertain. Due to the bizarre and unique nature of the case, Ernst and Young lawyer Elizabeth Pillon spoke of the difficulties the lawyers have faced.
“We don’t have the source-of-funds information that the banks are looking for and the monitor has serious concerns about finding another institution to hold these funds,” she said.
In the newest developments, a Supreme Court judge has ordered that $30 million in QuadrigaCX funds be deposited into an account at the Royal Bank of Canada. The funds will be used to cover the on-going court proceedings but could also be partially used to reimburse QuadrigaCX clients who are owed a combined $260 million.
The case continues to bring up further suspicious details, including that QuadrigaCX co-founder Michael Patryn served time in a U.S. jail for crimes related to identity theft.
While operating, QuadrigaCX was unable to find a traditional bank that would handle its accounts and as such had to go through a third-party. In October last year, the Canadian Imperial Bank of Commerce (CIBC) froze QuadrigaCX accounts linked to payment processor Costodian since they couldn’t ascertain who the funds belonged to.
Now, major cryptocurrency exchange Kraken has stepped into the fray, offering a $100,000 reward for any information that might help locate the missing QuadrigaCX funds.
It will be interesting to see how the situation develops, as it becomes more complex on a daily basis.