Several weeks ago, Vancouver-based cryptocurrency exchange QuadrigaCX claimed that the Canadian Imperial Bank of Commerce (CIBC) froze a number of accounts connected to the firm, worth C$25.7 million (US$19 million) and US$69,000.
The CIBC claimed that it was unable to determine who legally owned the funds, and asked the court to rule on whether the bank can seize the funds to determine whether they belong to Quadriga, its affected customers, or the firm’s payment processor.
On November 9, Judge Glenn Hainey of the Ontario Superior Court ruled in favor of the bank, noting that the owner of the funds is not clearly established. This means that Quadriga’s disputed funds must be turned over to the Accountant of the Superior Court “to await the outcome of a proceeding in this court, on notice to the Depositors, to determine entitlement to the Disputed Funds.”
On Quadriga’s claim that CIBC “wrongfully froze” their accounts, Hainey said, “I am not in a position on this record to make any determination as to CIBC’s possible liability for doing so. Accordingly, it would be inappropriate for me to extinguish any liability that CIBC may have for freezing the accounts in the absence of an evidentiary record that establishes that CIBC has no liability.”
As reported by Canadian newspaper Globe and Mail, Vancouver-based QuadrigaCX has not been able to access its funds since January, after CIBC froze five accounts belonging to the exchange’s payment processor, Costodian Inc., and its sole officer and director Jose Reyes.
According to the CIBC, there is no clear information as to whether the money belongs to the 388 users who deposited the funds, the custodian, or the exchange itself.
CIBC reported that these accounts received $51.8 million between December 4, 2017 and February 20, 2018, from Quadriga users. Some funds were later withdrawn, leaving about $21.6 million in the accounts. This and more factors caused the banks to freeze the accounts to determine who owned the accounts. Upon taking the matter to court, CIBC request that the funds be held until the rightful owner was identified.
While commenting on the matter, Gerald Cotton, CEO QuadrigaCX, told Globe and Mail that the company is considering their next step. He added that they are still waiting to hear from the courts whether CIBC acted appropriately in freezing their accounts.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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The mainstream financial world has been outwardly hostile towards cryptocurrencies for some time. Banks in Canada have exemplified this attitude in recent months, withdrawing essential banking services from cryptocurrency businesses while continuing to ratchet up their anti-crypto rhetoric.
Some analysts say this is in response to the direct threat posed to banks and traditional fiat banking systems by cryptocurrencies like Bitcoin, which offer fast international payments, low transaction fees and absolute security without the need for banks or other centralised institutions.
Now, in the latest example of banks taking exception to promising crypto businesses, press reports have revealed that Vancouver-based QuadrigaCX has been facing a freeze on assets worth as much as $28 million.
According to The Globe and Mail, the firm has been unable to access its account funds since January of this year. With the backing of local courts, the Canadian Imperial Bank of Commerce (CIBC) froze a number of accounts connected to the firm, on allegations that it was unable to determine who legally owned the funds.
Subsequently, the bank has asked to court to rule on whether the bank can seize the funds to determine whether they belong to Quadriga, its affected customers, or the firm’s payment processor.
In response to the attacks on their assets, Quadriga has responded robustly, accusing the bank of an orchestrated attempt to squeeze their business for its affiliations with the cryptocurrency sector.
According to legal representatives for the exchange, the implication that Quadriga was involved in unsavoury businesses practices is untrue and “highly offensive.”
“This court 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.”
In an email sent to customers impacted by the freeze, Quadriga said a “Canadian banking cartel” was intentionally making life difficult for them, and other crypto businesses, to encourage adoption in Canada.
This incident is but the latest in a series of similar swipes at the cryptocurrency sector from banks, both in Canada and further afield.
However, with Quadriga rival Coinsquare recently establishing a formal banking relationship with one of the country’s biggest banks, there remains some optimism that this attitude might be beginning to change, in favour of supporting the development of the nascent crypto sector there.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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