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QuadrigaCX Creditors’ Claims Attract an Investor

QuadrigaCX creditors’ claims have caught the eye of Argo partners. Argo Partners is a New York investment firm whose niche includes creditor’s claims, bankruptcies, insurance liquidations among others. Sources indicate that the investment firm is already communicating with impatient creditors. Ernst & Young that is the court-appointed bankruptcy trustee is still sorting things out. The death of Gerald Cotten in India has complicated things further.

Zeeshan Aziz who is the co-manager for Argo’s trading desk indicated:

“Typically when Argo is buying claims – as an example Toys ’R’ Us – all creditors we would buy claims from, their information is public. Toys ‘R’ Us tells us exactly who they owe money to and how much they owe.”

This predatory form of business has proven to be highly profitable for Argo. Argo Partners also recently considered the purchase of claims from Mt. Gox as well during its episode as well. Last year Argo put up an expression interest to purchase QuadrigaCX creditors’ claims.

So many issues surround the decline of QuadrigaCX. Apart from the cold wallet issue, QuadrigaCX kept little records. Ernst & Young already has a hard time in the determination of the number of creditors and the total assets Quadriga has left.

Gerald never ran any proper accounting system. Determination of Quadriga’s assets is at best an accurate estimate. Ernst & Young had been appointed as monitors to the cryptocurrency exchange by the Nova Scotia Supreme Court. They found only about CAD 28 million as assets.

Cotton left assets to Jennifer Robertson as a part of his estate and she agreed to sell off most of them. Ernst & Young found out that the company used clients’ funds to purchase some of these assets.

The number of cryptocurrency assets that QuadrigaCX creditors claim remains unclear. The exchange had at the height of its activities held over $190 million worth of cryptocurrency. Sources also indicate that a lot of those assets are in the cold wallets that only Cotten had the keys to. Other cryptocurrency exchanges hold a percentage of this as well.

This creates further problems for Ernst and Young. Jonathan Maruri, the manager of Argos trading team noted:

“Do they [EY] offset the cost of finding them? That’s a pretty hard question for us to answer. Because this stuff is new, there’s not a lot of crypto bankruptcies … We’ve got a collective 100-plus years of experience analyzing bankruptcies and no one knows [how to approach this].”

This already dashes the hopes of the return of the total amount of the creditor claims as this now seems unlikely. What is certain though is that Argo will pay each creditor a small down payment on each claim purchased. As more assets are apportioned by Ernst & Young, creditors also get some of the value of those assets as well.

The difference though is that the value is expected to be heavily discounted. That is what makes Argo Partners and others in the credit note purchase business to be seen as vultures by many.

QuadrigaCX Creditors’ Claims Attract an Investor

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