Crypto Exchange QuadrigaCX Reportedly Not Regulated by Canadian Securities Watchdog

Canadian cryptocurrency exchange QuadrigaCX is reportedly not regulated by the British Columbia Securities Commission (BCSC), the province’s financial regulator, Reuters reported on Feb. 7.

Vancouver-based cryptocurrency exchange QuadrigaCX was established in 2013 and is purportedly the first exchange in Canada to be licensed by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

According to Reuters, the BCSC was aware of Quadriga since 2017. However, the exchange was unregulated as there was reportedly no indication that Quadriga traded securities or derivatives, or operated as an exchange in general. “As such, BCSC does not regulate it,” a BCSC spokesman Brian Kladko reportedly told Reuters.

In the beginning of February —  following the sudden death of its 30-year-old founder Gerald Cotten —  it was reported that QuadrigaCX is missing CA$190 million dollars ($145 million) in digital assets.

QuadrigaCX has not been able to access its cold wallets, where the exchange kept most its assets, as Cotten was solely responsible for the wallets and corresponding keys. News recently broke that Cotten filed a will 12 days before his death, where he mentioned his wife, Jennifer Robertson, as the only beneficiary and the executor to his estate.

Cotten’s death sparked controversy in the crypto community, with some customers claiming he faked his death to steal their assets. However, later a death certificate, issued by the Government of Rajasthan’s Directorate of Economics and Statistics, was unveiled, which stated that Gerald William Cotten died on Dec. 9.

In response to customer accusations, Robertson reportedly stated in an affidavit that “I do not know the password or recovery key. Despite repeated and diligent searches, I have not been able to find them written down anywhere.” She also stated that “there have also been threats made against [her].”

Earlier last year, Quadriga was experiencing difficulties accessing $21.6 million of its funds, when the Canadian Imperial Bank of Commerce (CIBC) froze five accounts belonging to the exchange’s payment processor, Costodian Inc., and its owner, Jose Reyes. The bank purportedly froze the accounts due to an inability to identify the funds’ owners.

However, Judge Glenn Hainey of the Ontario Superior Court subsequently ruled in favor of the bank, agreeing that the owner of the funds was not clearly established. Per the ruling, CIBC then had to pass the funds over to the Accountant of the Superior Court, so the court could identify the owner.