Tag: Creditors

QuadrigaCX Bankruptcy Trustee Announces Interim Distribution of Funds

by Blockchain News

QuadrigaCX’s bankruptcy trustee, Ernst & Young, has announced an interim distribution of funds to creditors of the now-defunct Canadian cryptocurrency exchange. The announcement was made in consultation with estate inspectors, and a Notice to Affected Users will be posted soon with further details about the distribution process.

QuadrigaCX became insolvent in February 2019, following the death of its co-founder, Gerald Cotten. Cotten had taken the private keys to QuadrigaCX’s offline storage systems to his grave, leaving the exchange unable to access its funds. According to the Ontario Securities Commission (OSC), QuadrigaCX owes its affected clients an estimated $160 million.

Since then, Ernst & Young has been working as the bankruptcy trustee for QuadrigaCX and has been attempting to recover any assets it can for the exchange’s creditors. So far, the trustee has recovered $34.3 million worth of assets.

The interim distribution of funds provides some relief to QuadrigaCX’s creditors, who have been waiting for over two years to receive any compensation for their losses. However, the trustee has also stated that a small number of affected users may receive a Notice of Disallowance of Claim, meaning that their creditor’s claim has been revised or disallowed in the bankruptcy process.

If users receive a Notice of Disallowance, they have the right to appeal the decision. Miller Thomson, the law firm representing QuadrigaCX users, has advised affected users to review the reasons for the revision or disallowance and gather any necessary evidence to support their claim.

The collapse of QuadrigaCX was a major blow to the Canadian cryptocurrency market, raising concerns about investor protection and regulatory oversight. The QuadrigaCX case highlighted the need for proper safeguards and measures to protect investors and prevent similar incidents from happening in the future.

Ernst & Young’s announcement of the interim distribution of funds is a significant step in the bankruptcy proceedings of QuadrigaCX. However, it remains to be seen how much creditors will actually receive and how long the proceedings will continue. The bankruptcy trustee continues to work towards recovering any additional assets for the exchange’s creditors.

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QuadrigaCX Users to Receive Interim Distribution

by Blockchain News

Users of the now-defunct Canadian cryptocurrency exchange QuadrigaCX are expected to receive interim distribution of funds tied to bankruptcy proceedings in the coming weeks. Law firm Miller Thomson, which represents QuadrigaCX users, announced the news on May 8. Bankruptcy trustee Ernst & Young has consulted with estate inspectors to announce the interim distribution. In the near future, the trustee will post a Notice to Affected Users providing details about the manner and procedure of the distribution.

However, a small number of affected users are expected to receive a Notice of Disallowance of Claim, which means that the creditor’s claim has been revised or disallowed in the bankruptcy process. If users receive such a notice, they have the right to appeal the decision. Miller Thomson explained that users should review the reasons for the revision or disallowance and gather any necessary evidence to support their claim. The Trustee is likely to have issued a Notice of Disallowance if there was a discrepancy in the user’s proof of claim.

QuadrigaCX was once the largest cryptocurrency exchange in Canada before it became insolvent in February 2019. The exchange’s co-founder, Gerald Cotten, died in India, taking the private keys to QuadrigaCX’s offline storage systems to his grave. According to the Ontario Securities Commission (OSC), QuadrigaCX owes its affected clients an estimated $160 million.

In addition to losing access to cold storage, the OSC alleges that Cotten realized $86 million in crypto trading losses on the QuadrigaCX platform, which was then covered with users’ funds. Since then, bankruptcy trustee Ernst & Young has recovered $34.3 million worth of assets. The OSC stated that they did not identify any other assets beyond those identified by Ernst & Young.

The collapse of QuadrigaCX was a major blow to the Canadian cryptocurrency market, raising concerns about investor protection and regulatory oversight. The QuadrigaCX case highlighted the need for proper safeguards and measures to protect investors and prevent similar incidents from happening in the future.

The interim distribution of funds provides some relief to QuadrigaCX users, who have been waiting for over two years to receive any compensation for their losses. However, it remains to be seen how much users will actually receive and how long the bankruptcy proceedings will continue. The QuadrigaCX case serves as a cautionary tale for investors, highlighting the importance of conducting due diligence and being cautious when investing in cryptocurrencies.

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Genesis Capital’s Settlement Disrupted by Creditors

by Blockchain News

Genesis Capital, a troubled digital currency company, has hit another roadblock in its settlement process, just two months after reaching an initial agreement with creditors. The company’s parent firm, Digital Currency Group (DCG), has issued a statement on Twitter announcing that Genesis has filed a motion for mediation due to renewed demands from creditors.

In February, Genesis Capital submitted a comprehensive settlement proposal to the bankruptcy court after reaching an “agreement in principle” with DCG and its creditors. Under the proposed restructuring plan, Genesis creditors were expected to recover 80% of funds lost due to the company’s collapsed operations.

However, DCG has now reported that Genesis creditors have raised their demands, significantly disrupting the ongoing court process. “While it is difficult to understand the rationale given the limited engagement from Genesis creditors since the February court filing, our understanding is that a subset of creditors have decided to walk away from the prior agreement,” DCG wrote.

The disruption has raised concerns about the timing of the settlement process, with some experts questioning whether the prolonged proceedings could harm the company’s chances of recovery. However, others have suggested that the additional mediation may ultimately help resolve outstanding issues and pave the way for a successful restructuring.

Genesis Capital’s struggles come amid broader uncertainty in the digital currency market, with many investors and companies grappling with regulatory challenges and price volatility. The company’s difficulties are particularly notable given its high profile in the industry; Genesis has been a leading provider of digital asset lending and borrowing services, with a portfolio of more than $15 billion in assets.

Despite these challenges, DCG expressed confidence in Genesis’ ability to weather the storm. “We believe that Genesis is well-positioned to continue to provide best-in-class digital asset services,” the company wrote. “We remain committed to working through these challenges in partnership with our creditors and the broader digital asset community.”

The case underscores the challenges facing digital currency companies as they navigate a rapidly evolving regulatory landscape and seek to establish themselves as viable players in the broader financial ecosystem. With Genesis’ future hanging in the balance, the industry will be closely watching to see how the settlement process unfolds in the coming months.

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BlockFi Granted Extension to Submit Bankruptcy Exit Plan

by Blockchain News

BlockFi, a leading lender of digital assets, filed for bankruptcy in November 2022, and has been granted an extension until May 15 to submit an exit plan, according to a New Jersey bankruptcy judge. The crypto firm is exploring a potential sale of company assets or the possibility of getting an outside backer to support a restructuring deal, as per the company’s lawyer Joshua Sussberg.

The bankruptcy code requires debtors to propose a Chapter 11 plan within the first 120 days of filing, which meant that BlockFi was required to present a plan by March 27. However, on March 21, the company filed a request to prolong the deadline for its Chapter 11 plan by 90 days to June 26. The company’s lawyers argued that “much work remains” due to the scale and complexity of the Chapter 11 cases. Judge Michael Kaplan, the bankruptcy judge handling the case, deemed it worthwhile to extend the deadline to ensure the smooth continuation of the case, albeit a shorter extension than the one requested by BlockFi.

The company is estimated to owe up to $10 billion to over 100,000 creditors. A committee of BlockFi customers argued they should be allowed to take control of the bankruptcy case so that cryptocurrency held on the platform can be returned to creditors immediately. Committee lawyer Robert Stark told Kaplan that BlockFi creditors aren’t sophisticated lenders, but individual mom-and-pop retail customers, “many of whom have lost their life savings.” The committee cited the lack of a workable business for reorganization and the potential sale of the platform, which Stark referred to as a “bundle of sticks.”

Although Kaplan rejected the committee’s appeal, he granted an extension that was “modest” according to Sussberg, who stated that the company would have a plan ready for unsecured creditors to evaluate within two weeks. The crypto firm’s lawyers have indicated that they are exploring all possible avenues, including a sale of assets, to emerge from bankruptcy as a more robust entity.

BlockFi’s financial woes stem from the company’s controversial decision to offer high-yield accounts backed by cryptocurrencies like Bitcoin and Ethereum. However, the firm’s aggressive growth strategy was met with regulatory scrutiny, with several states such as New Jersey, Alabama, and Texas ordering the company to cease operations in their jurisdictions.

In January 2022, the US Securities and Exchange Commission (SEC) issued a cease-and-desist order against BlockFi, alleging that the firm’s interest accounts were unregistered securities. The SEC’s lawsuit is ongoing, with BlockFi seeking to have the case dismissed.

In conclusion, the extension granted to BlockFi provides the company with additional time to devise a plan to emerge from bankruptcy as a viable entity. However, the company faces several challenges, including regulatory scrutiny, legal battles, and the loss of customer confidence. Only time will tell whether BlockFi can overcome these hurdles and regain its position as a leading player in the cryptocurrency lending space.

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Mt. Gox Updates Creditors on Repayment Progress

by Blockchain News

Mt. Gox, once the largest cryptocurrency exchange, has been embroiled in a lengthy process of repaying its creditors since it was forced to shut down in 2014 after a massive hack that resulted in the loss of 850,000 Bitcoin (BTC). Despite subsequent high-profile crypto thefts, Mt. Gox’s demise remains the greatest cryptocurrency robbery in history.

In 2018, a Japanese court approved a compensation plan, but delays have continued to surround the repayment of funds to those affected. In March 2020, Nobuaki Kobayashi, the rehabilitation trustee for Mt. Gox, announced a new system for the remaining funds to be claimed by creditors through proof of claim via bank statements, transaction records, and identification documents.

The deadline for submitting claims was initially set for October 2020 but was later pushed back to December. After all claims were received, the total amount owed to creditors was nearly $16 billion, more than what was available for repayments.

On April 7, 2023, the company released a statement from Nobuaki Kobayashi, announcing that the deadline for creditors to provide their repayment information had passed. The statement also provided an update on the repayment process, stating that “base repayment, intermediate repayment, and early lump-sum repayments” will be carried out until October 31, 2023, with the possibility of an extension with the permission of the Tokyo District Court.

The statement further indicated that the trustee would carry out the necessary preparations for the repayments, including confirming the selections for repayment and sharing the information with banks, fund transfer providers, cryptocurrency exchanges, or any other custodian involved in the repayment.

However, due to the necessary preparations, the statement also noted that it is expected to take some time before the repayment is commenced. This news may disappoint some creditors who have been waiting for several years for their funds to be returned.

It is worth noting that in February 2023, the Mt. Gox Investment Fund, the largest creditor, decided to go for the option of an early payout in BTC for 90% of what is owed instead of waiting longer for a larger payment. This decision may have been driven by the uncertainty surrounding the repayment process and the desire to secure some form of payment sooner rather than later.

In conclusion, the saga of the Mt. Gox cryptocurrency exchange and the repayment of its creditors continues to drag on, with no clear end in sight. While the recent update provides some information on the repayment process, it is clear that it will take some time before the repayments are actually carried out. In the meantime, creditors will have to remain patient and hope that the process eventually comes to a satisfactory conclusion.

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Mt. Gox Creditors Given Extra Month to Register Claims, Distribution Deadline Delayed

by Blockchain News

Mt. Gox was a cryptocurrency exchange that was situated in Tokyo. At one point in time, it was responsible for more than 70% of all Bitcoin transactions. In 2014, the exchange suffered a hacking attack, which led to the theft of thousands of Bitcoin and the subsequent filing of a bankruptcy claim by the exchange. Since then, creditors have been holding out hope that they would eventually be compensated for the damages they sustained.

The official document cites a number of reasons for the postponement in the registration and distribution deadlines, one of which is the progress that rehabilitation creditors have achieved in regard to the selection and registration. Creditors have the choice of obtaining payment in the form of a lump amount, having their funds sent by a bank or another provider of money transfer services, or transacting with a cryptocurrency exchange or custodian.

Since the exchange went bankrupt, the delay in the payment has been a source of concern, especially in light of the large rise in value of Bitcoin that has occurred since the collapse of the exchange. There has been conjecture over the effect that creditors of Mt. Gox selling their assets may have on the market if they made that decision. Yet, according to a story that was published by Bloomberg not too long ago, the major creditors of Mt. Gox have no intentions to liquidate any of their Bitcoin holdings.

Creditors of Mt. Gox have been given some breathing room thanks to the extension of the registration and distribution deadlines. This gives the creditors more time to submit claims and decide how they would want to be compensated for their losses. As the cryptocurrency industry continues to mature, it is absolutely essential that exchanges place a high priority on security measures in order to forestall the occurrence of incidents similar to those that have already occurred in the past. This will ensure the safety of creditors as well as investors.

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Financially Distressed Core Scientific Owes $1 Billion To Creditors

by Blockchain News

Core Scientific, a major publicly traded crypto mining company in the U.S., on Friday raised the possibility of bankruptcy in a statement filed with the SEC (Securities and Exchange Commission). Blockchain.News reported the matter.

The Bitcoin miner sent a warning of its inability to pay down its creditors after saying it may have to apply for bankruptcy protection if it fails to improve its financial condition.

Core Scientific said it anticipates existing cash finances will be depleted by the end of the year or possibly sooner. The firm further revealed that it will not make its debt payments coming due in late October and early November.

Core Scientific admitted that it might be sued as a result of missed payments. The company stated in the filing that its creditors are therefore free to sue the firm for nonpayment, take action with respect to collateral and opt to accelerate the principal amount of such debts.

The latest report shows that Core Scientific owes about $1 billion to a series of companies including crypto lender BlockFi, investment banking firm B. Riley, crypto financial services firm NYDIG, Anchor Labs, the parent company of digital asset bank Anchorage Digital, and Barings LLC, an international investment management firm owned by MassMutual.

The largest loans and promissory notes taken out by the Bitcoin miner from B. Riley, MassMutual Barings, and BlockFi, were $75 million, $65.6 million, and $60.7 million, respectively, as of June 30.

Core Scientific took a huge amount of loans to finance its hardware and infrastructure improvements, beginning in the second half of 2021, when Bitcoin prices were on the rise (reaching a peak of nearly $70,000 in November) and when miners were racing to grow their operations amid the recent market downturn that started early this year.

Core Scientific said its operating performance and liquidity have been severely affected by the prolonged decrease in Bitcoin price, the increase in electricity costs, as well as the increase in the global Bitcoin network hash rate as more miners are competing for the reward.

In the filing, Core Scientific also blamed default payments by Celsius Networks LLC for its financial struggles. Despite selling most of its Bitcoin in June, the firm is down to $26.6 million in cash.

Core Scientific is not the only struggling firm in the mining sector. In September, Compute North, one of the largest operators of crypto-mining data centers, filed for Chapter 11 bankruptcy and said its CEO stepped down as the fall in crypto prices continues raging the industry. Early this month, Marathon Digital Holdings, disclosed an $80 million exposure to the bankrupt mining firm.

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Mt.Gox Sets Jan 10 as Deadline for Creditors to Register for Compensation

by Blockchain News

There seems to be a beam of light for customers of bitcoin exchange operator Mt.Gox as a date has been set for creditors to register and choose a repayment plan for them to recover their lost funds.

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According to news from a Rehabilitation Trustee, Nobuaki Kobayashi, users are required to register payee information on the MTGOX Online Rehabilitation Claim Filing System. Creditors that wish to receive payment have therefore been given a deadline of January 10, 2023, to complete their Selection and registration.

Creditors were also given a guideline on how to proceed with their initial registration; rehabilitation creditors must log into the system themselves in order to ensure safe and secure payment. 

Additionally, it is anticipated that the Rehabilitation Trustee will use the address provided by rehabilitation creditors to verify the identity or provide it to other parties participating in the repayment process in order to receive Repayment. 

Therefore, any rehabilitation creditors who need to rectify or otherwise change the address information that has already been notified should complete the address change processes right away.

The now-defunct Mt. Gox

Bitcoin exchange called Mt.Gox is situated in Shibuya, Tokyo, Japan. Initially created by Jed McCaleb in July 2010, Mt.Gox was later sold to Mark Karpeles’ Tibanne Co. in March 2011. Online transactions were also halted after it was hacked in February 2014 and its Bitcoins were stolen. 

About 850,000 bitcoins were lost by Mt.Gox in 2011 as a result of hacker attacks. This loss cost the exchange $460 million at the time or about $40 billion at the current price of one bitcoin. Thousands of the exchange’s users, who are cryptocurrency owners and pay out of their own pockets, covered this loss.

Sources claim that the Mt.Gox Rehabilitation trustee had intentions to speed up reimbursements and offered creditors the choice of Bitcoin, cash, or Bitcoin Cash as payment; however, creditor Eric Wall denied this information by claiming that the payment system was not yet ready.

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