Canada's Courts to Take Custody of Crypto Exchange QuadrigaCX’s Frozen Funds

Canada's Courts to Take Custody of Crypto Exchange QuadrigaCX’s Frozen Funds

Omar Faridi
  • Canada, Ontario's Superior Court of Justice will be taking over custody and liability of about $20 million that reportedly belongs to crypto exchange, QuadrigaCX.
  • QuadrigaCX had been banking with the Canadian Imperial Bank of Commerce (CIBC), and the institution had frozen the exchange's assets as it couldn't verify the actual owner(s) of its accounts.

The Ontario Superior Court of Justice has reportedly moved toward taking custody of a large amount of funds that belong to digital asset exchange, QuadrigaCX.

Nearly $20 million Frozen

Recent court documents show that the Canadian Imperial Bank of Commerce (CIBC) has frozen accounts holding the large sum of assets - which include $69,000 USD and $25.7 million CAD (appr. $19.4 million USD).

According to the court papers, the CIBC was not able to identify the actual owner(s) of the frozen assets.

The court documents also state that the funds may have been deposited by QuadrigraCX’s customers, and that the assets were frozen because the CIBC couldn’t properly verify the identities of the individuals that made the deposits.

QuadrigaCX Takes Legal Action

However, QuadrigaCX’s management team has now taken legal action in order to reclaim the money - as the exchange’s users have been unable access their funds.

Moreover, the crypto trading platform’s managers allege that their business operations have been adversely affected due to the large sum of assets being inaccessible.

Emails exchanged between QuadrigaCX’s employees and CIBC have been presented (along with the court documents) as proof that the exchange had been trying to clearly communicate with the Canadian bank.

"Under Extreme Pressure" To Quickly Resolve Issue

Additionally, QuadrigaCX’s representatives noted that the company is “under extreme pressure from many clients to address this ASAP”, and that its customers had started filing lawsuits against it.

Despite seemingly convincing arguments and concerns presented by both QuadrigaCX’s management and the CIBC, the court has not sided with either party.

Judge Glenn Hainey, who has been assigned to handle the case, has instructed the CIBC to transfer custody and liability of the large sum of assets to the courts.

The Courts Will Try To Determine Owner Of Accounts

After the funds have been received, the court system’s officials will reportedly try to determine the actual owner(s) of the funds.

Notably, the CIBC had initially requested that the ownership of the frozen assets be transferred over to the courts, because it has the authority to formally investigate the matter.

Although it is possible that the funds could ultimately be returned to QuadrigaCX, Judge Hainey clarified: 

I am not in a position on this record to make any determination as to CIBC’s possible liability for [freezing the accounts associated with the assets].

Judge Hainey

As CryptoGlobe reported last month, lawyers representing QuadrigaCX stated: 

This court should not succumb to the bank’s unsubstantiated and highly offensive speculation that there must be shady dealings afoot because Quadriga's business is a trading platform for individuals trading in cryptocurrencies.

QuadrigaCX's lawyers