Troubled Canadian crypto exchange QuadrigaCX owes its customers $190 million and cannot access most of the funds, according to a court filing obtained by CoinDesk.

In a sworn affidavit filed Jan. 31 with the Nova Scotia Supreme Court, Jennifer Robertson, identified as the widow of QuadrigaCX founder Gerald Cotten, said the exchange owes its customers roughly $250 million CAD ($190 million) in both cryptocurrency and fiat. The company previously announced it had filed for creditor protection on its website, but the filing itself provides greater details about its predicament.

As of Jan. 31, 2019, there were roughly 115,000 users with balances signed up on the exchange, with $70 million CAD in fiat and $180 million CAD in crypto owed overall, according to the filing.

The exchange holds roughly 26,500 bitcoin ($92.3 million USD), 11,000 bitcoin cash ($1.3 million), 11,000 bitcoin cash SV ($707,000), 35,000 bitcoin gold ($352,000), nearly 200,000 litecoin ($6.5 million) and about 430,000 ether ($46 million), totaling $147 million, according to the affidavit.

It was not clear what portion of the exchange’s crypto holding were kept in cold storage, versus its hot wallet. In the affidavit, Robertson explained that “only a minimal amount of coins” were stored in the hot wallet, but specifics were not provided.

Robertson added that:

“The normal procedure was that [QuadrigaCX founder and CEO Gerald Cotten] would move the majority of the coins to cold storage as a way to protect the coins from hacking or other virtual theft.”

She added that Cotten held “sole responsibility for handling the funds and coins,” and the remaining team members have had no luck accessing the exchange’s cold wallets since.

There is a possibility that some of Quadriga’s funds are being stored on other exchanges, though this has not been confirmed, she said.

Cotten reportedly died of Crohn’s disease in Jaipur, India in early December 2018. The exchange announced his death earlier this month. A death certificate was included in the list of exhibits.

The founder seemingly had sole control or knowledge of Quadriga’s cold storage solution. Robertson wrote that after his death, “Quadriga’s inventory of cryptocurrency has become unavailable and some of it may be lost.”

She later added that she has no business records whatsoever for QuadrigaCX or its affiliated companies. While she does have Cotten’s laptop, the device is encrypted and she does not have its password or recovery key. While a consultant has been retained to try and recover the laptop’s contents, he has had limited success to date.

Fiat issues

The exchange’s access to its fiat holdings have also been “severely compromised” by banking issues, the filing says. In particular, a now-resolved legal fight with the Canadian Imperial Bank of Commerce (CIBC) has resulted in ongoing issues.

In particular, a payment processor working with Quadriga, Billerfy, has reported problems with finding a banking partner, preventing the processor from releasing any funds back to the exchange, and therefore, to its customers.

In addition to the roughly $30 million CAD currently being held by Billerfy, three other third-party processors are holding around $565,000 CAD combined.

A fifth payment processor called WB21 is holding another $9 million CAD and $2.4 million USD (roughly $9.2 million USD total) on Quadriga’s behalf.

However, WB21 “is refusing to release the funds or respond to communications from Quadriga,” the affidavit claimed.

In an email, WB21 PR manager Ralf Mueller wrote, “WB21 did not confirm the balances mentioned in the affidavit to be correct. In lieu of Quadriga’s current legal situation, our compliance team had to restrict the account until the investigation is completed.”

“We can`t disclose client balances publicly due to our confidentiality duties,” Mueller added in a subsequent email.

The U.S. Securities and Exchange Commission is suing WB21 US Inc and WB21 NA Inc, as well as affiliated individuals on unrelated fraud charges.

Under an “additional issues” section, Robertson noted that users have also continued to deposit funds after Cotten’s death, which the exchange accepted. Some of these came from automatic deposits, though CoinDesk has confirmed that manual deposits were also accepted from at least one user.

Request for assistance

The affidavit concludes with a request that the court enter a stay of proceedings to preempt any lawsuits that might be filed.

The exchange “urgently needs a stay of proceedings which will allow Quadriga and its contractors additional time to find whatever stores of cryptocurrency may be available and also to negotiate the bank drafts available to Quadriga,” Robertson wrote.

“Many, if not all” of the exchange’s customers might suffer further damages without a stay, she said.

Users have been complaining about withdrawal issues and a lack of communication from QuadrigaCX’s team for months, with concerns exacerbated earlier this week when the website went down entirely for maintenance.

Robertson noted that the exchange’s new directors voted to “temporarily pause” the platform on Jan. 26. Though she did not explicitly say the website went down as a result, the portal only became inaccessible sometime in the morning on Jan. 28.

To help pay users back, the exchange is considering selling off its operating platform. “Multiple parties” have already approached the exchange to inquire about acquiring the operating platform, though none are named in the filing.

Robertson added that she believes the “trading platform may have significant value,” but this value may be reduced if the exchange is sued.

Quadriga is hoping the court will schedule a hearing on Feb. 5 to confirm the stay of proceedings, as well as appoint Ernst & Young to act as an independent third party to oversee its operations for the immediate future.

Read Robertson’s affidavit here:

Jennifer Robertson Affidavit by on Scribd

Editor’s note: This article has been updated with comment from WB21.

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