Canada’s top law firms are set to converge this Valentine’s Day on a Halifax courtroom, competing for a piece of the C$260 million ($196 million) mystery behind the Quadriga CX cryptocurrency exchange.
The lawyers are contending for the right to represent some 115,000 Quadriga customers who are owed about C$190 million in Bitcoin and other digital assets plus another C$70 million in cash in court proceedings involving the shuttered Vancouver-based exchange. Quadriga was granted creditor protection last week in Nova Scotia Supreme Court, halting any lawsuits while the firm seeks to restructure with the help of Ernst & Young.
Bennett Jones LLP and McInnes Cooper were first to submit a request to represent users, with retail investor Tong Zou claiming he was “one of the largest affected individual users” and forwarding his name in an affidavit that included five other named account holders. Since then, one of those holders has withdrawn from the group, leaving 141 affected users with C$11.9 million of cash claims and C$1.11 million in cryptocurrency, according to a Feb. 11 court filing.
Others law firms have come forward, filing competing submissions ahead of Thursday’s hearing before Nova Scotia Supreme Court Justice Michael Wood, who may then appoint counsel to represent those account holders. For the law firms, such an opportunity would give them a slice of the administrative charges from the process to cover their professional fees.
Osler, Hoskin & Harcourt is working with Patterson Law and seeking to represent people such as Richard Kagerer, a software consultant from British Columbia who’s owed C$19,900 in crypto and U.S. dollar balances. He’s been down this road before: Kagerer’s company is one of the creditors for Japan’s Mt. Gox exchange, which entered insolvency proceedings in 2014. Kagerer also said in his Feb. 11 statement that he was “among a small number of customers” who filed claims in court when another Canadian cryptocurrency exchange shut down a few years ago.