QuadrigaCX Update: Navigating Trust in Crypto Exchanges Amid Insolvency and Scams

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In an update for users of the defunct cryptocurrency exchange, QuadrigaCX, the law firm Miller Thomson announced that interim distribution of funds tied to bankruptcy proceedings will be scheduled “in the coming weeks.” Bankruptcy trustee Ernest & Young shared this news in consultation with estate inspectors, with further details about the manner and procedure to be provided in a Notice to Affected Users soon.

Interestingly, a small number of affected users are expected to receive a Notice of Disallowance of Claim. Such communication indicates that their claim as a creditor has been revised or disallowed during the bankruptcy process. According to Miller Thomson, those who receive the Notice of Disallowance can appeal the decision by reviewing the reasons for the disallowance and collecting any necessary evidence to support their claim. Typically, the trustee issues a Notice of Disallowance in cases where there’s a discrepancy in the user’s proof of claim.

It’s essential to mention that QuadrigaCX, once Canada’s largest cryptocurrency exchange, turned insolvent in February 2019 when its co-founder Gerald Cotten passed away in India. His death led to the loss of private keys to QuadrigaCX’s offline storage systems. As estimated by the Ontario Securities Commission (OSC), the platform owes its affected clients approximately $160 million. Furthermore, the OSC states that Cotten sustained $86 million in crypto trading losses on the QuadrigaCX platform, which were then covered with user funds.

To date, bankruptcy trustee Ernest & Young has managed to recover $34.3 million worth of assets. In their report, the OSC wrote, “We did not identify any other assets beyond those identified by Ernst & Young.”

In light of the recent collapse of FTX and the OSC’s findings about QuadrigaCX, questions arise about the reliability and trustworthiness of cryptocurrency exchanges. While these platforms provide access to crypto markets, they are also subject to a wide range of threats, including scams and hacks.

On one hand, users can benefit from investing in cryptocurrencies and participating in this burgeoning market segment. On the other hand, they need to remain vigilant by conducting their due diligence and ensuring they comprehend how these platforms safeguard their assets. In the end, the challenge remains to strike a balance between capitalizing on the opportunities offered by cryptocurrency exchanges and mitigating the associated risks to navigate the complex world of digital assets.

Source: Cointelegraph

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