The QuadrigaCX trading platform has been struggling for a while, only to be amplified by the death of former head Gerald Cotten. Much of the court discussions have surrounded the laptop of Cotten, which allegedly contains access to cold wallets and more that could reimburse creditors for what they’ve lost. In fact, at least for now, it is believed to be the only way to access all of these keys. However, the attention now is turning to the creditors themselves, as they prepare for a new battle – claims to the first ones paid.

Anyone with a fiat balance in the exchange, prior to it being shut down, used the creditors as a method of protection in the local courts. Now, rather than waiting for the case to be completed, they are arguing that they are the rightful owners of the first payouts. However, the crypto holders with QuadrigaCX are insisting that they, instead, have the right to be reimbursed from the assets that have been recovered.

Prioritization would likely be the unfair choice, according to some fiat holders that would prefer to be the first instead. Xitong Zou, a QuadrigaCX customer, and Canadian resident put it simply –

“There seems to be a conflict between the creditors themselves.”

In any distressing financial circumstance, this type of tension is fairly common. However, the situation with QuadrigaCX is entirely unique, considering that the $140 million in crypto is missing, while the $50 million in fiat currency is tied up with third parties. Still, it is more likely that the courts would have access to the fiat currency sooner than the cryptocurrency, considering that they still have to find it.

Considering that Cotton was the only QuadrigaCX member that holds the private keys of their reserves, finding the millions of crypto assets has proven to be incredibly difficult. The QuadrigaCX platform was given creditor protection last week under the Canadian Companies’ Creditors Arrangement Act (CCAA). The courts also provided a 30-day window for the company to determine their actual assets, after which time they will appear in court again to discuss their findings.

Obviously, the QuadrigaCX customers are less than thrilled about this “progress.” Social media posts are piling up on this subject, with many customers believing that a criminal investigation should take place to see if the funds were stolen, rather than lost. So far, the only information that creditors have been given is that the fiat funds were with payment processors.

Zou commented,

“[F]rom a legal standpoint you could argue that this money is not even Quadriga’s from that point and that we could be seen as trustees rather than creditors.” He added, “Of course people who hold more crypto … will end up getting less if this happens, so I don’t see this happening.”

There has yet to be a single crypto holder to voice the opinion that fiat creditors should be on equal footing with themselves. At best, there’s been childish name-calling and insults throughout social media, as if the crypto creditors themselves can achieve anything through their tantrums.

However, fiat holder Elvis Cavalic believes that his side should not actually be prioritized. He said,

“If there were a major divide and a legal precedent for preferential treatment towards fiat holders, I’m not going to lie I’d be more than happy to recover my losses but is that fair? No, not at all.”

An anonymous customer, who wished to remain that way in a likely effort to avoid a personal attack, says that fiat holders shouldn’t even have to share the funds retrieved with the crypto holders. He said,

“I don’t care what value bitcoin is for someone else, my Canadian dollars [don’t] = [some] amount of bitcoin,”

said this person, who showed CoinDesk a log of his transactions at QuadrigaCX.

“What happens if they find the cold wallets and the value of bitcoin apparently tripled since are my fellow crypto investors going to share their 300 [percent] profit with me although I only had fiat? What happens if they find the cold wallets and the value of bitcoin went down. I am going to pay for other people’s bad investment?”

He added one more jab, saying that there’s no purpose for his fiat funds to be attributed to someone’s stupidity.

Cavalic sees this as a “simple” situation – every customer trusted QuadrigaCX to some degree. To him, the whole community is in a shared problem, since everyone was taken aback when the platform received their creditor protection. Still, “fair” is debatable, though it is up to the courts to try to achieve this trait.

QuadrigaCX may be protected from lawsuits for now, but it won’t be forever. Zou, for instance, has already requested the support of law firm Bennett Jones as a representative for a class action lawsuit. The request was filed via an affidavit with the Nova Scotia Supreme Court. Other customers have sought legal help in preparation as well, looking to local law firms like Miller Thompson, Osler, Harkin and Harcourt, and Gowlings.

No firm has been decided as counsel, but there’s a scheduled hearing on the 14th of February to address the issue. Even once one is determined, there’s no way to bring down a lawsuit against the company with the order of protection in effect. Christine Duhaime of Duhaime Law stated that she thinks there will be two counsels ultimately decided on, which will focus on litigation on one side, and the communication with customers and the court-appointed monitor on the other side.

Breaking away all of the debate and insults, this comes down to money – who will get it, who is first, and when it will happen. Cavalic commented that there are many creditors who believe that the legal system will give them what they are owed, though Zou doesn’t see a full refund happening. In fact, he thinks that the courts and QuadrigaCX will end up

“extending the stay as well.”

Creditors don’t have a good feeling about what comes next, Zou believes. He added,

“That’s been a general sentiment so far – lots of [anger], bitterness, and most likely seeing pennies on the dollar after waiting a while.”

Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC) Price Analysis Watch (Feb 8th)

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