Tag: Ernst & Young

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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Big Four Accounting Firm Says Financial Institutions Need Regulatory Clarity on Crypto To Remain Competitive

by Dailyhodl

Ernst & Young, one of the world’s leading accounting institutions, says that financial services firms must learn how to navigate the regulatory issues in the crypto markets to remain competitive.

In a new wide-ranging report about the 2022 global regulatory outlook, the firm discusses how the recent growth of digital assets and big tech companies means each must now enter the conversation about further regulation.

“New entrants that have traditionally operated outside the regulatory perimeter… are now offering financial activities such as payments or credit.

These new entrants either rely on regulatory arbitrage to operate without being subject to full-blown financial services regulation or are subject to much lighter regulation than, for example, banks.”

The report also says that financial services firms must keep in step with the evolving regulatory landscape concerning crypto assets.

“A second way that the regulatory perimeter is expanding is addressing cryptocurrencies, digital assets, tokens and related products and services.

As the acceptance and transaction volume of these assets has grown, there is increasing momentum to address regulatory concerns – along with financial stability and investor protection – head on.”

Ernst & Young says one challenge is that risk assessment and technological innovation usually don’t work hand in hand, and so there is a need to bridge the gap.

“The people who understand risk and regulation often do not overlap significantly with the people who understand evolving technologies, such as application programming interfaces (APIs), cloud technology, crypto or related solutions.

As a result, many firms need to find talent that can sit at the intersection of those realms and facilitate conversations so that risks can be identified and anticipated and controls embedded.”

The report also notes that governments and central banks have begun to enter the nascent space through the creation of central bank digital currencies (CBDCs).

“Some jurisdictions, such as the Bahamas, have already launched CBDCs and a number have experiments underway (such as the US digital dollar)… or policy plans (the Bank of England and EU) that would introduce retail or wholesale CDBCs.”

Back in December, Mexico announced that its central bank would release a CBDC by 2024.

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EY aims to simplify cross-border withholding tax process with blockchain

by Cointelegraph

Global professional services firm Ernst & Young (EY) continues exploring the potential of blockchain technology to improve taxation processes with a new initiative.

The company announced Wednesday that EY completed a blockchain-based project to address complexities and inefficiencies in the cross-border withholding tax (WHT) process, generally a paper-based process where data could be lost or not shared properly due to privacy concerns.

“It also may not be trusted by counterparties and tax authorities, who require more and more information to validate that the correct amount of withholding tax has been paid either by relief at source or after a withholding reclaim,” EY noted.

The new WHT solution implements EY’s blockchain-based technology to enable secure, automated and decentralized sharing of financial information between tax authorities and related intermediaries and improve tax compliance and reduce fraud.

The project involved several global tax authorities, including the United Kingdom’s tax collection agency HM Revenue & Customs, the Netherlands Tax Administration and ​​relevant authorities in Norway. Participating companies included French banking group BNP Paribas, American investment bank JPMorgan, financial services company Northern Trust, and Citibank.

As part of the project, EY experts alongside state and industry representatives have specifically tested the TaxGrid blockchain solution, a multi-party blockchain network connecting financial intermediaries to share tax and finance data. The solution deploys smart contracts to tokenize investment entitlements and distributes them on blockchain wallets owned by various financial entities. The tool uses tokens to receive investment data and calculate the appropriate WHT once final investors are identified.

To ensure privacy on the TaxGrid network, the solution implements zero-knowledge proof technology, a digital protocol that allows sharing data between parties without using passwords or other private information.

Related: Binance cuts withdrawal limits, rolls out tax reporting tool

“Distributed ledger technology as a solution to the WHT challenge is no longer merely a concept,” EY’s WHT distributed ledger report notes, adding that the project has provided a basis for enabling a global solution to address various demands of taxpayers and tax authorities. “This could support the European Commission’s proposal to begin building a common, standardized, EU-wide system for withholding tax relief at source,” starting in 2022, EY stated.

EY has been actively working on blockchain and cryptocurrency-related tax solutions in recent years. The company last year released a crypto tax app called EY CryptoPrep to provide a fully automated product to assist clients with tax filings in the United States.