Ernst & Young Empties QuadrigaCX’s Wallets Taking Control of All the Crypto Funds

| Updated
by Bhushan Akolkar · 3 min read
Ernst & Young Empties QuadrigaCX’s Wallets Taking Control of All the Crypto Funds
Photo: gab482 / Flickr

In the new report E&Y notes that it will have complete control of the exchange’s funds in its cold storage until further notice from the court.

On Thursday, February 20, financial auditor Ernst and Young released a report showing the exchange of funds from the hot wallets of now-defunct QuadrigaCX exchange. After losing the private keys to its wallets last month, following the sudden death of its owner, the Canadian crypto exchange appointed E&Y for the advisory services related to its funds.

The Latest E&Y report shows that QuadrigaCX has transferred all of its online cryptocurrencies to the auditor, last week on February 14. “On February 14, 2019, after testing the transfer arrangements, the Applicants successfully transferred the following cryptocurrency to the Monitor,” EY said.

The total funds transferred includes 51 Bitcoin (BTC), 952 Ethereum (ETH), 822 Litecoin (LTC), 33 Bitcoin Cash (BCH), and 2,033 Bitcoin Gold (BTG). This amounts to crypto assets worth a total of over $400,000. The report also states that E&Y will hold the funds in its cold storage until further notice from the Nova Scotia court.

Analysis of the public blockchain data shows that before transferring this huge amount, the QuadrigaCX wallets performed a test transaction.

Funding the Creditor Protection Proceedings

E&Y has also been struggling to gather enough funds to continue ahead with the creditor protection proceedings. The report states:

“The Applicants currently have no accessible funds to fund the CCAA proceedings, other than the interim financing provided by Ms. [Jennifer] Robertson which will be exhausted in the near term.”

The report notes that Ms. Robertson, the widow of QuadrigaCX’s deceased owner Gerry Cotten, has earlier paid a retainer fee of 50,000 CAD to E&Y before the commencement of the proceedings. Later, on February 6 she sent an additional $150,000. E&Y is a third-party processor holding different amounts of fiat on behalf of QuadrigaCX. The E&Y report also names two other cash resources in its report.

The first is the Canadian law firm Steward McKelvey. The law firm holds around 1000 banks drafts of QuadrigaCX worth a total of CAD$5.8 million. The second name is of Custodian Inc, QuadrigaCX’s payment processor, holding a collection of bank drafts worth CAD$25 million. Until now Custodian Inc has released four bank drafts worth CAD$20 million.

After the sudden death of QuadrigaCX-owner Gerry Cotten in December 2018, the exchange lost access to its cold storage wallets as all the public keys were with him. Soon after the death, the exchange went defunct by closing all its operations. Since then, the exchange has been in big trouble to fetch out these funds and return its investors all their investments.

Neary CAD$150 million worth investors’ funds are lying in QuadrigaCX’s cold wallets. Earlier, lawyers proposed to sell the entire exchange operations to generate funds and compensate the victims. Last week’s report by Coinspeaker suggests that the exchange lost another $400k by accidentally transferring 100 BTC tokens to a currently inaccessible wallet.

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