Embattled cryptocurrency exchange QuadrigaCX has received another reprieve from its creditors, as the search for nearly $200 million in missing virtual currency continues following the sudden death of the company's co-founder.
Nova Scotia Supreme Court Justice Michael Wood on Tuesday granted the insolvent company a 45-day extension for a stay of proceedings.
"I'm satisfied that it's appropriate to extend the stay," he told the court. "There's value in continuing it and the company — the applicants — are continuing to work in good faith."
One of Canada's largest cryptocurrency trading platforms, QuadrigaCX and its affiliates were granted creditor protection in Nova Scotia last month after the company's CEO and sole director, 30-year-old Gerald Cotten of Fall River, N.S., died suddenly in December while travelling in India.
According to court documents, he was the only person who had the encrypted pass codes needed to access $190 million in missing Bitcoins and other cryptocurrency locked in QuadrigaCX's offline digital wallets.
Another $70 million in cash is owed to Quadriga users, much of it tied up in bank drafts held by third-party payment processors.
The extension for creditor protection, until April 18, allows the court-appointed monitor to continue searching for the missing digital assets.
Meanwhile, a lawyer representing QuadrigaCX asked the Halifax court to appoint a chief restructuring officer to represent the company and potentially oversee a future sales process.
"There are a number of third parties floating around that have expressed an interest in acquiring the platform," Maurice Chiasson told the court.
"We think that there's a benefit to having this position appointed now ... And then ultimately once we get into a sales process, we're going to need someone that's knowledgeable about the business."
In addition, Chiasson said Cotten's widow, Jennifer Robertson, has no experience in the cryptocurrency field and would prefer not to oversee the company.
"She wants to co-operate, she wants to be helpful, but she wants to be out of the limelight," Chiasson said.
Elizabeth Pillon, a lawyer representing the monitor — Ernst and Young — expressed support for having an independent director in charge of QuadrigaCX.
She said there is a potential issue with having Robertson, the executor of her late husband's estate, involved in the creditor protection process.
"From that perspective, having some independence is also important from the monitor's perspective," she said.
Pillon added that "the existing directors did not have prior experience in this company and also have expressed some reluctance, given the notoriety of the situation."
The judge approved the appointment of a chief restructuring officer, but said their work must be approved in advance by the monitor to ensure professional fees will not be "out of control."
Gavin MacDonald, a partner at Cox & Palmer — one of two law firms representing roughly 115,000 affected QuadrigaCX users — expressed concern with a cash flow projection that would have seen Robertson reimbursed for costs associated with the company.
"We are concerned about the repayment by the applicants of $300,000 to Ms. Robertson in the first week of March contemplated by the filed cash flow projection," MacDonald said in a letter to the judge.
QuadrigaCX's lawyer said the issue could be addressed at a later date.
Meanwhile, the judge also granted an order allowing the monitor to gain access to trading platform data stored in the cloud with Amazon Web Services, based in Seattle, Wash.