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Canada’s Largest Crypto Exchange Files for Bankruptcy

Canada’s largest crypto exchange, QuadrigaCX, has filed for bankruptcy. Additional bad news for the crypto industry was hardly needed given cryptocurrency prices 80 percent below 2018 peaks. Price predictions are now “pointless,” one analyst says.

Posted Feb 02, 2019

With cryptocurrencies treading water at exceedingly low levels (by recent standards), the crypto industry was hardly in need of more depressing news. This was, though, exactly what was delivered on Friday when it was announced that Canada’s largest crypto exchange, QuadrigaCX, had filed for bankruptcy.

Though the flagship digital currency, bitcoin, was little changed in response to the news, it continues to trade at levels in and around $3,500—nearly 80 percent lower than last year’s high of $17,252.

QuadrigaCX has reportedly lost access to its cold storage wallets in which $190 million worth of bitcoin, bitcoin cash, bitcoin cash SV, bitcoin gold, litecoin and ethereum were held.

The bankruptcy is linked to the death in December of QuadrigaCX’s founder and CEO Gerald Cotton, who reportedly died with all knowledge of how to access QuadrigaCX’s cold storage.

Cold storage refers to offline reserves of cryptocurrency. These are deemed a necessary security precaution by crypto exchanges as they eliminate the risk that hackers accessing exchange servers or other computers might steal the entirety of the exchange’s crypto assets.

“We have worked extensively to address our liquidity issues, which include attempting to locate and secure our very significant cryptocurrency reserves held in cold wallets,” QuadrigaCX said in a statement. “Unfortunately, these efforts have not been successful.”

Doubts over the security of digital currencies will continue to discourage potential crypto investors. Together with regulatory crackdowns and social media bans, these are high on the list of reasons for 2018’s crypto collapse.

For the year ahead, “price predictions are pointless,” says Matthew Morris of the Investment Week. “No one knows for certain what will happen and timescales are even harder to predict,” he adds.

LMAX Exchange analysts are happy to make a call, though. “We look for bitcoin to round out 2019 trading back in the $5,000 to $8,000 region,” LMAX’s Joel Kruger said in January.

Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.