Canada’s top law firms are set to converge this Valentine’s Day on a Halifax courtroom, competing for a piece of the $260 million (Canadian) 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 $190 million in Bitcoin and other digital assets plus another $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.
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, seeking to represent Ryan Kneer, Giuseppe Burtini and others. Kneer, a Calgary resident, has been involved in cryptocurrency since 2013 and is a professional market maker for the crypto market and a developer of automated trading software, according to his Feb. 8 statement.
Like Tong, Kneer has been communicating with other Quadriga account holders through the Telegram instant messaging application. He chose not to disclose the amount of his claim — for good reason: Many affected users are “deeply concerned about protecting their privacy,” he said in his filing. “Among other reasons for protecting their privacy, individuals who own large quantities of cryptocurrency have been targeted for theft, phishing and even assault.”
Burtini, a resident of Kelowna, British Columbia, said he is a representative of an unidentified blockchain company that sold tokens on Quadriga’s trading platform and had “a significant multimillion dollar fiat (CAD) currency balance with Quadriga,” according to his Feb. 8 sworn statement. The company has been requesting payment of its balance from Quadriga for a year. In his affidavit, he said Osler has 59 users mostly from Canada with a total of $12.4 million of claims, ranging from $200 to $4 million, who support the law firm’s appointment.
Miller Thomson LLP is working with Cox & Palmer, seeking to represent Toronto resident Parkham Pakjou and about 200 other creditors who have in excess of $13.2 million of claims against Quadriga. Claims from those clients range from $100 to in excess of $2 million, according to its submission.
The Canada’s Companies’ Creditors Arrangement Act process has the ability of bringing forward a law firm to work with a monitor and represent the interests of a vulnerable group, typically the employees and pensioners.