Canadian Banks Worried Of QuadrigaCX Assets Origin

Canadian banks have reportedly expressed hesitation towards the infamous QuadrigaCX. According to the official report, these banking institutions are heavily concerned with the insolvent digital currency exchange’s assets.

Canadian Banks’ Hesitation

It is worth noting that the company is currently facing financial difficulty after the sudden death of Gerry Cotten, the firm’s very own founder. Apparently, the executive was believed to be the only person in the company to have access to its cold wallets.

As previously reported, QuadrigaCX has sent all of its remaining cryptocurrency assets directly from its hot wallets to Big Four auditing company called Ernst & Young. The latter, in particular, is the court-appointed monitor responsible for overseeing the case.

During the recent court hearing, lawyers for the Bank of Montreal and the aforementioned auditing firm suggested that the banks do not feel comfortable with the idea of managing the funds. According to these lawyers, the main reason behind the disdain is the uncertainty of the funds’ origin.

A lawyer tasked to represent Ernst & Young named Elizabeth Pillon said that she totally understands the banks’ hesitation. And considering the reason behind their move, she cannot blame them for doing so. Pillon added that the alleged money laundering schemes are enough for banks to hesitate moving forward.

Origin of the Funds

The above-mentioned lawyer further said that the monitor comes with serious concerns, most of which point to finding another institution that could possibly hold these funds. At the end of the court hearing, Nova Scotia Supreme Court’s Justice Michael Wood issued an order that would eventually see the crypto exchange firm’s money deposited directly to a Royal Bank account.

Ernst & Young, on the other hand, will reportedly utilize these funds in an attempt to pay for all of the ongoing court proceedings. The money will then be used to partially compensate about hundreds of thousands of users of the company, all of whom are believed to be owed of around $260 million in digital currencies and cash.

The unwillingness concerning the holding of QuadrigaCX’s funds also took place during the time of its operations. This was particularly during the time when the company did not get a bank account due to reluctance from banks themselves. As a result, the firm decided to get help from various third-party payment processors.

According to a report from November last year, the court ruled in favor of the bank, which was during the time the Canadian Imperial Bank of Commerce decided to freeze the accounts of the payment processor. The same reason was given – the identities of the owners of the funds.