4 Agencies Are Investigating Crypto Exchange QuadrigaCX

At least four different law enforcement and regulatory agencies are investigating defunct Canadian crypto exchange QuadrigaCX, a new report by bankruptcy trustee Ernst & Young said.

George Kinsman, the court-appointed bankruptcy trustee and EY employee overseeing the exchange's shutdown and the return of funds to its users, wrote a new report Monday sharing some information about EY's ongoing attempts to recover crypto and fiat for its creditors.

The document outlines the different investigations surrounding the exchange, as well as EY's motion to transfer QuadrigaCX's ongoing bankruptcy proceedings from Nova Scotia to Ontario, which the Big Four auditor says will reduce costs moving forward.

"The Trustee is aware of at least four independent active law enforcement or regulatory reviews in progress which have included inquiries or in some cases formal requests for documents and/or data disclosure from the Trustee," Kinsman wrote Monday.

One of these requests is subject to a confidentiality requirement, and Kinsman cannot share any further details, he said.

"Furthermore, as a result of the confidentiality and non-disclosure restrictions inherent in these processes, the Trustee is unable to share details with and obtain approval of its activities from the Inspectors and therefore will require ongoing direction from a court. In addition, given the complexity of the requests made or anticipated to be made of the Trustee, it is expected that multiple court attendances will be required to obtain assistance with these issues and provide direction to the Trustee."

Some of the court appearances EY might request will come on "An urgent and confidential basis," which may be easier to arrange in Toronto than in Nova Scotia, Kinsman wrote.

"Given the above and the fact that the majority of the professionals expected to be involved with the court attendances are based in Toronto, the Trustee expects that it would be more cost-effective for future motions to be heard by a court in Toronto, eliminating the need for a significant number of professionals to incur costs to travel from Toronto to Halifax."

Regardless of the move, EY's remaining tasks include managing its ongoing claims process, which concludes on Aug. 31; raising funds by selling certain assets belonging to Cotten's estate; and continuing its efforts with law enforcement agencies.

Kinsman will provide updates on the claims and asset recovery processes at a later date, he wrote, adding that "Some assets have been monetized to date in accordance with [a previous] Asset Preservation Order."