In its third report, Ernst & Young (EY), the advisory service appointed to be QuadrigaCX's monitor after the Canadian exchange was granted creditor protection at the beginning of February, released addresses for six of the exchange's cold bitcoin wallets. Whereas QuadrigaCX previously stated the exchange holds up to 26,488 bitcoin in its offline wallets, EY's third report indicates that number might actually be more like zero.
The Empty Wallets
On February 12, EY issued its first report, revealing that 103 of the 154 bitcoins stored in QuadrigaCX's hot wallets were "inadvertently transferred … to Quadriga cold wallets which the Company is currently unable to access." The monitor's second report attributed the mistake to a "platform setting error," but those 103 bitcoins appear to be all that is being held in the six newly revealed bitcoin wallet addresses. According to the report, "There have been no deposits into the Identified Bitcoin Cold Wallets since April 2018 except for the inadvertent transfer of bitcoin by the Applicants as disclosed in the First Report."
The reported 26,488 bitcoins held in cold wallets was meant to be used to help pay the $250 million the exchange owes to users in fiat and cryptocurrency obligations. EY's report does note that both the monitor and the exchange will continue to work to find any other cold wallet address that may contain bitcoin reserves, as well as additional cryptocurrency holdings, which QuadrigaCX has asserted includes 11,378 bitcoin cash, 11,149 bitcoin cash SV, 35,230 bitcoin gold, 199,888 Litecoin, and 429,966 Ether.
EY is analyzing a series of "Potential Other Cold Wallets," though early indications show these wallets contain no cryptocurrency.
EY's Other Findings
Along with the empty cold wallets, EY's report also details a continuing set of deposits being placed in QuadrigaCX's hot wallets. According to the report, since the exchange first filed for creditor protection on January 31, approximately 21,000 Canadian dollars' worth of cryptocurrency has been deposited in the exchange's hot wallets from an unknown source. Right now, the exchange and monitor are working to identify the depositor(s) and will later ask the court how it recommends tackling this situation.
Speaking of mysteries, EY has also identified three different accounts with unnamed cryptocurrency exchanges believed to have been operated by QuadrigaCX or Gerry Cotten, the exchange's deceased founder and CEO. The report states that these accounts did in fact receive cryptocurrency transfers from the six empty cold wallets. Efforts are still being made to recover any of QuadrigaCX's funds possibly located at the other exchanges, with EY having already received a "minimal" amount of cryptocurrency from one of the identified exchanges.
Finally, the third report states that EY is in full support of Jennifer Robertson's request for the Nova Scotia Supreme Court to appoint a chief restructuring officer (CRO) and extend the exchange's stay of proceedings. Last week, Robertson, one of QuadrigaCX's two current directors and Cotten's widow, asked for the appointment of a CRO with experience in the cryptocurrency industry to assist EY with finding the exchange's missing crypto funds.
As for the extended stay of proceedings, the exchange filed a motion asking the court to add 45 to 60 days to the initial 30-day leeway that was handed down on February 5. According to the third report, Miller Thomson and Cox & Palmer, the law firms chosen to represent QuadrigaCX's affected users, believe an additional stay of proceedings should not be more than 30 days.