Quadriga exchange delays withdrawals as bank suspends assets

October 10, 2018
Chris Wheal

QuadrigaCX, Canada’s largest digital asset exchange, has said that legal action from a bank on an third party was to blame for delays in fiat currency withdrawals from its customers.

Exchange claims its bank is illegally withholding funds

The Vancouver-based crypto exchange said it was having difficultly gaining access to nearly $22m of its funds since January after the Canadian Imperial Bank of Commerce (CIBC) suspended five accounts belonging to Quadriga’s payment processor Costodian Inc.

Third party accounts frozen

CIBC said it had frozen the accounts of Jose Reyes, the owner of Costodian Inc, due to an inability to identify the owners of the funds. It requested a court to suspend the funds, as there appeared to be some dispute as to whether they belonged to Quadriga, Costodian or the 388 users who deposited the funds.

Quadriga maintains there has been a misunderstanding, saying it is the undisputed owner and there was “no evidence” of competing claims.

The exchange’s legal representative told the court “it should not succumb to the bank’s unsubstantiated and highly offensive speculation that there must be shady dealings afoot because Quadriga’s business is a trading platform for individuals trading in cryptocurrencies”.

Conspiracy against crypto firms

Gerald Cotton, Quadriga’s chief executive, believes Canadian banks have been guilty of conspiring against cryptocurrency firms by denying them access to financial services.

Quadriga was launched in 2013 and was the first Canadian crypto exchange to be licenced by the Financial Transactions and Reports Analysis Center of Canada (Fintrac) – the country’s main financial regulator.

Cotton told the court: “There are currently delays for some specific withdrawal options, particularly due to the fact that CIBC is withholding tens of millions of dollars that belong to us that were in an account of one of our payment processors.”

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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