QuadrigaCX: British Columbia’s Regulator Reportedly Didn’t Have Oversight Over the Exchange

Those using the now embattled cryptocurrency exchange QuadrigaCX won’t be able to count on support from British Columbia’s securities regulator, the British Columbia Securities Commission, as it wasn’t regulated by the agency.

According to Bloomberg Brian Kladko, a spokesman for the British Columbia Securities Commission, revealed the agency currently has no indications QuadrigaCX was “operating as a marketplace or exchange under British Columbia securities laws.” Kladko concluded:

As such, BCSC does not regulate it.

The cryptocurrency exchange went down weeks after his founder and CEO Gerald Cotten unexpectedly passed away, on December 9. It was taken down after it was revealed Cotton was the only person with access to its cold storage keys, meaning QuadrigaCX was left locked out of the $145 million it owed users.

Reports have shown he filed for a will 12 days before passing away in India, and the documents show he left all his assets to his wife, Jennifer Robertson, and he made her the executor of his estate. In an attempt to resolve the complex situation Robertson filed an affidavit, where she mentioned she wasn’t able to retrieve the funds.

She explained:

The laptop computer from which Gerry carried out the Companies' business is encrypted and I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them (the passwords) written down anywhere.

QuadrigaCX has since been granted creditor protection by a Nova Scotia Supreme court, which essentially protects it from lawsuits while it figures the situation out. To pay back its 115,000 users, it’s reportedly looking to sell its platform.

Research conducted by blockchain portal Zerononcense has, however, claimed QuadrigaCX might’ve never had the $145 million to begin with, and that the story of being locked out doesn’t make sense as wallets associated with the exchange have been moving funds. Cotten’s death certificate, issued by the Government of Rajasthan’s Directorate of Economics and Statistics, has since surfaced.

To date, Kladko added, no crypto exchange has been recognized as a marketplace by the securities regulator. The regulator does have oversight over the firm behind QuadrigaCX, Quadriga Fintech Solutions Corp., which is a public company. The British Columbia Securities Commission has reportedly ordered its shares to stop trading back in 2016, as it failed to “make required filings.”

Canada’s federal police agency, the Royal Canadian Mounted Police, is aware of the situation but hasn’t revealed whether it’s investigating it or not. Sgt. Penny Hermann, in an email to Bloomberg, was quoted as saying:

The RCMP is aware of the allegations against Quadriga CX. We will not be providing any further information.

Robertson, Cotten’s widow, has reportedly hired a hacker to try to access the embattled exchange’s funds in his laptop.