Cryptocurrency experts say a number of events that have locked users of a $ 180 million Vancouver currency exchange into digital assets are a wake-up call to Canadian investors and act as a catalyst for better regulation.
The voice started when Gerald Cotten, the 30-year-old CEO and sole director of QuadrigaCX, country largest cryptocurrency exchange, died of complications associated with Crohn's disease while visiting India, according to court documents filed with the Nova Scotia Supreme Court.
Cotten was the only person with access to QuadrigaCX's locked digital "cold books" that have "very significant cryptocurrency reserves", according to the company. Meanwhile, Cot's wife, Jennifer Robertson, filed an alleged proverb after Seeking their home in Fall River, N.S., she couldn't find any passwords or business records.
On Tuesday, QuadrigaCX was granted creditor protection and 30-day extension of the case, preventing any lawsuit from being filed with the company.
Christine Duhaime, a financial crime lawyer, said that while early crypto cyclists were libertarian types who wanted to move money without state control, the meteoric rise of Bitcoin into the crypto market brought ordinary everyday people who can now only learn to lack regulation over the crypto market.
"I think they assumed it because our financial services sector is so healthy, and that's because it was also obedient. And I think most Canadians would be shocked to know that there is no any regulation. Shocked to know these people do not have licenses … I think they would be shocked to know that they have no assurance that if they were all to pay money now, they could get the money back , "said Duhaime.
Duhaime said what is needed is a bank-like regulatory regime – call it "a baby bank license for crypto" – or at least basic rules set by a self-regulatory body. "Just some basic things, so Canadians can trust their exchanges again, because now they don't, and they don't do it properly."
B.C. The Securities Commission did not meet a request for comment.
Despite the holes, Canada has at least some rules in place. In contrast to most nationsCanada uses tax and money-laundering and terrorist financing legislation for cryptographic baskets, according to U.S. Pat. Library of Congress.
Chris Rowell, a postdoctoral researcher and teacher at the University of B.C.'s Sauder School of Business, said death was a tragedy but it could lead to regulators thinking about what requirements should beOuld is asked for exchange.
He also said it is a testament to how secure the technology is, as the assets cannot be recovered unless someone can find the private keys to open the wallets. In that sense, the events point to organizational challenges rather than underlying technological weaknesses.
"The exchanges now need to be fully aware of how they manage their assets and how they communicate the measures they take because consumers now need to care," he said.
At Reddit, which has been a go-to forum for many crypto speculators, some panicked users have speculated that they have been scammed and now caught in a massive scam that may even contain a false death. For this purpose, some users have speculated Cotten is still living and living off their money.
When he arrived at Postmedia News on Tuesday, Philip Hannan, a spokesman for Global Affairs Canada, said he could not disclose information about Cott's death due to the provisions of the Privacy Act. "Our thoughts and sympathies are with the loved ones of a Canadian who died while visiting India. We have provided assistance to the family in this very difficult time," he said in a written statement.
Later that day, Coindesk reported that it had received an alleged copy of COTT's death certificate from India, which it sent on its site. The certificate, for a "Gerald William Cottan", listed the deathplace as Fortis Escorts Hospital, Jaipur.
QuadrigaCX lawyer Maurice Chiasson said Tuesday's judgments were needed to bring stability to a chaotic case, marked by "threats, blurred and otherwise" of litigation.
"This is an attempt to call a timeout," he told the court, adding that the decision by QuadrigaCX's newly appointed directors to close the site on January 28 caused a "reasonable amount of panic".
In his submission to the court, Chiasson said it was difficult for his lawyer to deal with the unregulated and secret world of cryptography.
Chiasson said significant resources have been hired to access the encrypted files on Cotts laptop. "There has been some limited success," he said, adding that the computer has been examined by a retired RCMP officer with expertise in encryption technology.
Legal documents show that QuadrigaCX had been exposed to liquidity problems during the past year, but a major problem arose in January 2018, when CIBC froze about 25.7 million. USD of its funds stored in a third party payment processor. This money has been transferred to the Costodian Inc. processor, but they have not deposited the bank proposals, legal documents say.
QuadrigaCX and its affiliates are registered in B.C. but have no offices, no bank accounts and no employees, except a handful of contractors.
– With files from The Canadian Press
CLICK HERE to report a writing field.
Is there more to this story? We would like to hear from you about this or other stories that you think we should know about. Email [email protected]</ P