QuadrigaCX

Status Update

May 12, 2020

At Representative Counsel and the Official Committee’s request, on May 12, 2020, the Trustee published a Notice to Creditors: Interim Claim Status Report (the “Notice”), which can be read at the following link here. The purpose of the Notice is to provide Affected Users with an interim update on the status of the claims process, including total number of claims filed to May 6, 2020.

In aggregate, the Trustee received 16,959 proofs of claim in total. The breakdown of amounts of various currencies can be found on page 3 of the Notice.

As a final point, the Trustee has stated that as Quadriga failed to file tax returns in the ordinary course of business, the determination of a Canada Revenue Agency tax claim against Quadriga is necessary prior to the Trustee declaring any distribution to Affected Users or creditors generally, as tax claims rank pari passu with the unsecured claims of Affected Users.

For the purposes of avoiding further cost to the estate, this update is being posted on the website rather than being sent out in a mass communication. Questions on this matter can be directed to Representative Counsel via email at quadrigacx@millerthomson.com.

Status Update

April 16, 2020

On April 14, 2020, the Court heard a motion for an order (“Order”), among other things, authorizing the Trustee to comply with the production demand issued by the Canada Revenue Agency (“CRA”) pursuant to s. 231.2 of the Income Tax Act (“Production Demand”). A complete and unredacted copy of the Production Demand is included at Tab 2, Appendix B of the Trustee’s motion record, which can be found here.

As set out in the Production Demand, the purpose of the demand is to complete an audit of Quadriga’s tax liabilities (if any). The CRA has confirmed to Representative Counsel that Affected Users, as a group and individually, are not under investigation by the CRA.

In accordance with directions from the Official Committee, Representative Counsel attended the hearing but did not oppose the Order. A document outlining the rationale of the Official Committee for this decision can be found on our website here.

The Court issued the Order, confirming that the Trustee is authorized and permitted to comply with the Production Demand. A copy of the order can be found here.

CRA Production Demand

March 25, 2020

On March 24, 2020, the Trustee served a motion record, returnable on April 14, 2020, for an order, among other things, authorizing compliance with a production demand by the Canada
Revenue Agency (the “CRA”) that was issued pursuant to s. 231.2 of the Income Tax Act (the “Production Demand”).

The Production Demand requests access to QuadrigaCX records for the purposes of conducting an audit. It is published in unredacted form here.

Representative Counsel has been negotiating with the Trustee and the CRA over the past few months in accordance with directions from the Official Committee. For an overview of
the resolution of these outstanding tax issues, a document outlining the decision and rationale of the Official Committee and the resulting negotiations by Representative Counsel can be read on our website at the following link here.

Implications of COVID-19, Miller Thomson LLP Offices and Communications as Representative Counsel

March 19, 2020

Please note that Miller Thomson LLP remains open for business. However, due to COVID-19, and to ensure the health and safety of our firm’s members and the public, our firm is moving toward working remotely (i.e., from our homes). For more information on Miller Thomson’s preparedness, please visit our website at the following URL: https://www.millerthomson.com/en/covid-19-resources/.

Notwithstanding this change in circumstances, Representative Counsel will continue to represent the interests of Affected Users in accordance with the Representative Counsel Appointment Order (see here) and there will be no disruption in our legal services or representation.

Representative Counsel continues to review inquiries received from Affected Users by email. In order to manage the volume of inquiries and to effectively respond to all Affected Users, we ask that all Affected Users submit inquiries to Representative Counsel through email at quadricx@millerthomson.com.

Representative Counsel reviews emails received through this email address and will respond to inquiries through further communications to Affected Users or as otherwise determined appropriate.

Thank you all for your patience.

Claims Process

On June 27th, 2019, the Nova Scotia Supreme Court approved the claims process for Affected Users.

In order to file a claim, Affected Users must fill out and submit the Affected User Proof of Claim form. Please carefully review the Instruction Letter included with the Affected User Proof of Claim form to ensure proper completion of your claim.

The deadline to file a proof of claim was set at August 31, 2019.  However, the Bankruptcy and Insolvency Act (the “BIA”) does not impose a “bar date” for claims precluding parties who believe they have a claim from filing one; rather, the BIA provides that a claimant who fails to file a claim does not share in any distribution that was made prior to the filing of their claim (assuming claim is valid). Accordingly, if you were unable to file your proof of claim before the August 31, 2019 deadline, Representative Counsel recommends you file your proof of claim with the Trustee as soon as possible, since a distribution has neither occurred nor been declared.

Please note that all Proof of Claim forms should be properly completed and delivered to Ernst & Young Inc. in its capacity as trustee in bankruptcy of 0984750 B.C. Ltd. DBA Quadriga CX and Quadriga Coin Exchange. Sending your information to Representative Counsel does not constitute filing a claim in the claims process.

Proof of Claim forms may be submitted by hand delivery, courier, fax OR email as follows:

Ernst & Young Inc.
Court-appointed Trustee of Quadriga
Ernst & Young Tower
100 Adelaide Street West
Toronto, Ontario M5H 0B3

Attn: Quadriga Trustee

Email: quadriga.trustee@ca.ey.com
Fax: 416-864-1174

Any questions related to filling out the Affected User Proof of Claim form may be directed to Representative Counsel at quadrigacx@millerthomson.com.

Statement from the Official Committee of Affected Users

August 12, 2019

RE: Inadvertent Transfer of ~104BTC

The Official Committee of Affected Users (the “Official Committee”) has worked extensively with Representative Counsel to investigate and consider potential claims, and the cost and risks associated with such claims, surrounding the inadvertent transfer of approximately 104 btc into five (5) inaccessible cold wallets of Quadriga (the “Transfer”). The Transfer occurred on or about February 7, 2019. The five (5) inaccessible cold wallets were described as the “Identified Bit Coin Cold Wallets” in paragraph 43 of the Third Report of the Monitor dated March 1, 2019. Ernst & Young Inc. in its capacity as Monitor of Quadriga and its affiliated entities reported the relevant facts surrounding the Transfer in the First Report of the Monitor dated February 12, 2019 and the Second Report of the Monitor dated February 20, 2019 (collectively, the “Monitor’s Reports”).

In addition to receiving legal advice from Representative Counsel, which is subject to privilege and confidentiality, the Official Committee considered a number of factors, including:

  • the facts and circumstances surrounding the Transfer, as set out in the Monitor’s Reports and certain additional facts, which are confidential;
  • the legal uncertainties surrounding potential liability;
  • the costs associated with pursuing such a claim to judgment, including any appeals of same;
  • the potential adverse impact, costs and delay on the ongoing insolvency proceedings;
  • the costs associated with obtaining recognition of and enforcing a judgment, and the likelihood of collecting on the judgment;
  • the potential adverse consequences to the Quadriga estate if any claim was unsuccessful;
  • the quantum at issue relative to the costs involved in pursuing claims; and
  • that there is no information known to support any improper or malicious intent by any party involved with the Transfer.

After significant deliberations within the Official Committee, and based on the advice of Representative Counsel, the Official Committee determined that it is not in the best interests of Affected Users to spend estate resources to pursue claims with respect to the Transfer.

Update for Affected Users

August 1, 2019

Representative Counsel has been made aware that certain Affected Users believe that the Trustee may be producing additional information to Affected Users to assist with filing proofs of claim. We have discussed the issue with the Trustee and understand that there is NOT additional information for Affected Users that can be made available at this time, including trading histories and withdrawal histories.

Affected Users should refer to the Instruction Letter included with their claim package to assist with filing their proof of claim and use the claims tool made available by the Trustee at https://userbalance.quadrigacxtrustee.com/ to determine their Quadriga account balance for purposes of filing a proof of claim. Affected Users may also refer to Guides, FAQs and Sample Forms produced by Representative Counsel to assist Affected Users with their proofs of claim. The Guides, FAQs and Sample Forms are available at https://www.millerthomson.com/en/quadrigacx/. These may particularly be of assistance if you disagree with your account balance as set out in the claims tool made available by the Trustee, including if you have a “Completed Withdrawal” for which you did not receive any funds.

To summarize, there will not be additional information made available to Affected Users by the Trustee to assist with filing their proofs of claim and Affected Users should proceed with filing their proofs of claim prior to August 31, 2019.

Quadriga CCAA Proceeding

Pursuant to the Order of the Honourable Mr. Justice Michael J. Wood of the Nova Scotia Supreme Court issued February 5, 2019 (the “Initial Order”): (i) Quadriga Fintech Solutions Corp., Whiteside Capital Corporation and 0984750 B.C. Ltd. (dba QuadrigaCX and Quadriga Coin Exchange) (collectively, the “Applicants”) were granted protection under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c.C-36, as amended (the “CCAA”); and (ii) Ernst & Young Inc. was appointed as Monitor of the Applicants.

Further information regarding the Quadriga case is available on the Monitor’s website at https://documentcentre.eycan.com/Pages/Main.aspx?SID=1445.

Appointment as Representative Counsel

Pursuant to the order of the Nova Scotia Supreme Court issued February 28, 2019 (the “Representative Counsel Appointment Order”), Miller Thomson LLP and Cox & Palmer (together, “Representative Counsel”), were appointed as representative counsel on behalf of users affected by the shutdown of the QuadrigaCX cryptocurrency exchange platform (collectively, the “Affected Users”).

Official Committee

Pursuant to the Representative Counsel Appointment Order, Representative Counsel, in consultation with the Monitor, was directed to establish the Official Committee of Affected Users (the “Official Committee”), to provide input and direction to Representative Counsel.

By Order of the Nova Scotia Supreme Court, dated March 19, 2019, the Official Committee has been appointed (the “Committee Appointment Order”). The Official Committee consists of seven (7) Affected Users (“Committee Members”) and two (2) Alternate Committee Members who are representative of the diverse interests comprising the Affected Users. The list of Committee Members can be found in the Committee Appointment Order.

Quadriga Bankruptcy Proceeding

On April 11, 2019, the Court issued an Order (the “Bankruptcy Transition Order”) terminating the CCAA Proceedings of Quadriga Fintech Solutions Corp., Whiteside Capital Corporation and 0984750 B.C. Ltd. (dba QuadrigaCX and Quadriga Coin Exchange).

On April 15, 2019, Quadriga Fintech Solutions Corp., Whiteside Capital Corporation and 0984750 B.C. Ltd. (dba QuadrigaCX and Quadriga Coin Exchange) made an assignment into bankruptcy, naming Ernst & Young Inc. as the trustee in bankruptcy (in such capacity, the “Trustee”).

Communications with Representative Counsel

Representative Counsel has established this webpage to facilitate communications with the Affected Users. The webpage will include information and documents relevant to Affected Users.

Representative Counsel has received from Ernst & Young Inc. a list of Affected Users, including their contact information and QuadrigaCX customer IDs.

Please note that Representative Counsel is experiencing a high volume of email inquiries.

Part of Representative Counsel’s duties prescribed by the Representative Counsel Appointment Order, is to communicate with Affected Users regarding the proceedings. However, this aspect of our mandate can be time consuming and expensive. Representative Counsel is dedicated to fulfilling its mandate in the most cost-effective way to limit the drain on the resources of the estate. To achieve this objective, we request that Affected Users who wish to communicate with Representative Counsel follow the procedure set out herein.

If you have a question for Representative Counsel, please ensure the following details are included in your email to quadrigacx@millerthomson.com:

  • Your full name;
  • Your Quadriga CX ID;
  • The amount of your claim; and
  • The nature of your claim:
    • Fiat;
    • Cryptocurrency (ex. BTC, Ethereum, etc.);
    • Pending Withdrawal;
    • Completed Withdrawal; or
    • Other (please clarify).

This will ensure that Representative Counsel’s communications are efficient and that parties communicating with Representative Counsel are in fact Affected Users. If you do not provide the information listed above in your email, you may not receive a response from Representative Counsel.

Representative Counsel is committed to responding to Affected Users, rather than members of the general public or the media.

Email is the preferred form of communication with Representative Counsel. Affected Users are encouraged to voice their concerns by tweeting to the Official Committee as a method to reduce costs on communications. The Official Committee’s twitter account (@QCXCommittee) can be found here. The Official Committee will select and collate tweets from Affected Users for inclusion in updated future FAQs.

Representative Counsel advises Affected Users to refer to our FAQ, updated FAQ and tax-related FAQ sheets for further information.