Crypto Frontline

Canadian Regulator Investigates QuadrigaCX

Canadian Regulator Investigates QuadrigaCX

Canadian Regulator Investigates QuadrigaCX
February 12
11:20 2019

 

The largest Canadian cryptocurrency exchange QuadrigaCX continues to be one of the hottest subjects this month, following the sudden death of the company’s CEO Gerald Cotton, which was the only person who had access to cold wallets and thus a big portion of the clients’ funds.

Fortunately for the exchange, it managed to gain additional time to solve the issue, after the Nova Scotia Supreme Court set up an order for creditor protection, which will expire in 30 days. Despite this taking place, it is still unclear whether the QuadrigaCX situation will ever be solved.

OSC initiates a probe

Canada’s biggest securities regulator, Ontario Securities Commission (OSC) had already announced on Friday last week that it is examining the situation at the exchange, a move triggered a day after British Columbia Securities Commission mentioned it does not regulate the exchange, according to a recent Reuters article.

Concerns about a regulatory gap linger since investors are not protected against potential losses if the access to cold wallets won’t be restored. The Commission issued a statement to Reuters, saying:

Given the potential harm to Ontario investors, we are looking into this matter and have already been in contact with the monitor.

Despite the statement, Kristen Rose OSC’s spokeswoman declined to mention is there’s an actual investigation taking place. More than $130 million worth of cryptocurrencies had been frozen in QuadrigaCX’s accounts and now the Canadian regulator is trying to find out whether the company violated any securities law.

Allan Goodman, co-chair of the technology group at Goodmans LLP law firm raised the question of whether the exchange should have been registered before starting its activity. This is a direct consequence of delayed cryptocurrency regulation in Canada, a move which should have been a priority for lawmakers.

Countries like The Philippines had already taken serious measures for blockchain-based companies, in order to provide order and compliance, as with any other sector of the economy.

At the present time, there’s no further information on the OSC’s investigation, but as Allan Goodman mentioned, in case of any securities law violations, the company, or its officers and directors could be held accountable.

Given that QuadrigaCX accounted for an estimate of 60% of cryptocurrency trading activity in Canada, the result of the investigation could have deep consequences and it might leave another big black mark on the overall industry reputation. Most likely, regulators across the globe will be more motivated to step up regulatory procedures and make sure that all companies are compliant.

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