Although it seems like months, it's barely been two weeks since QuadrigaCX filed for creditor protection, beginning a chain of stories that have gotten more and more bizarre with each new detail. As ETHNews has covered the developments coming from within the company, a group of law firms presented their cases yesterday, February 14, to the Nova Scotia Supreme Court in hopes of being chosen as one of the firms to represent the 115,000 affected users to whom QuadrigaCX owes $250 million in fiat and cryptocurrency obligations.
Unfortunately, those law firms will have to keep waiting. According to CBC News reporter Jack Julian, who live-tweeted yesterday's court gathering, Judge Michael Wood did not make a decision regarding the affected users' legal representation and instead moved the decision to next week.
The three teams who have filed notices of motion to represent the exchange's affected users are Bennett Jones LLP and McInnes Cooper; Miller Thomson with Cox and Palmer; and Osler, Hoskin and Harcourt with Patterson Law.
Bennett Jones LLP and McInnes Cooper are looking to represent users like Xitong Zou, who alleges in his affidavit to be "one of the largest individual Affected Users" with 560,000 Canadian dollars (CAD) owed in claims. The affidavit was filed along with five other named account holders, totaling CAD$3.6 million, $81,697, and 523 Ether owed in claims. Amanda McLachlan, a lawyer at Bennet Jones LLP, filed an affidavit in support of the law firm being chosen to represent the affected users, stating:
"The appointment of Representative Counsel with experience in the area of investigations and asset tracing would not only assist the Monitor in the efficient administration of the [Companies' Creditors Arrangement Act] process, but will ensure that appropriate recovery efforts will be performed to the benefit of the Affected Users."
Miller Thomson along with Cox and Palmer are looking to represent users like Parham Pakjou, whose affidavit argues in favor of Miller Thomson on the grounds that the law firm would help free up the exchange's monitor, Ernst & Young Inc. (EY), to find the missing cryptocurrency. Pakjou explains:
"I believe the Monitor's resources in these [Companies' Creditors Arrangement Act] Proceedings would be better devoted toward identifying, locating and securing Quadriga's assets, rather than diverting their attention from those important tasks to communicate directly with approximately 115,000 Customers."
Lastly, Osler, Hoskin and Harcourt and Patterson Law's proposal for representation actually presents a situation in which affected users with "impressive credentials and expertise" would assist the law firms in the proceedings. The proposal states that a committee of affected users would be "constituted immediately" and supported by at least 59 users with more than $12.4 million in claims against QuadrigaCX.
Earlier this week, EY published its first report detailing the CAD$468,675 worth of bitcoin that was accidentally moved to the inaccessible cold wallet supposedly controlled by Gerry Cotten, the exchange's deceased owner. The report also highlighted the "limited circumstances where multiple law firms applied to be representative counsel." Despite the rarity of the situation, a letter from QuadrigaCX's legal team states that the exchange and EY "take no position" on which law firm the court should choose as representation.