Ernst and Young (EY), the bankruptcy trustee for collapsed cryptocurrency exchange QuadrigaCX, plans to evaluate the company’s assets and settle disputes before disbursing creditors and users of the crypto exchange.

EY will be going to court on January 26 to propose a date for accessing the claims for crypto assets rather than the date of the exchange’s bankruptcy on April 15, 2019.

The trustee is not taking the same stance as cryptocurrency startup BlockCAT, one of the creditors.

The date's choice may have a big impact on the fiat value of the funds that creditors are expected to receive from the remaining asset pool. BlockCAT has already filed a compensation claim of about CAD 4 million. The crypto startup has filed a petition and is looking to maximize payouts.

According to the firm, the actual evaluation date for users’ cryptocurrency claims should begin with the initial court order for the exchange and not a separate date proposed by its trustee.

The decision of the court regarding the date will be significant for both the creditors looking for disbursement in fiat currency and the former users of the exchange who are making claims for crypto assets.

After QuadrigaCX went on liquidation, CAD$ 224 million was made in claims by 17,053 users. However, the claims could be totaling CAD$291, depending on the date chosen for the asset valuation.

The trustee is expected to make sure claims made are properly disbursed before the exchange is finally dissolved. However, the court needs to decide on a valuation date before any payment process begins.

The problem is now the date of valuation, as BlockCAT asks for an earlier valuation date while the users are of a different opinion. BlockCAT wants to maximize its payout from the asset pool, as it seems the exchange’s remaining assets will not be enough to settle all claims.

The main issue the trustee needs to settle before commencing disbursement is the disagreement between the creditors and the users on the date for claim settlement. While the creditors predominantly have fiat money claims, the former users of the exchange have cryptocurrency claims.

The trustee will be paying out claims made for U.S. dollars and cryptocurrency in Canadian dollars. This means that the court has to choose the right valuation date before disbursement.

Concerning the problem, the trustee filed a factum (statement of facts) at the Ontario Superior Court of Justice to receive approval to use the exchange rate on the conversions' bankruptcy date. With the value of many crypto assets rising far beyond expectations since 2019, when the exchange was declared bankrupt, the trustees could pay hefty sums to use the current valuation.

Evans Thomas, the commercial litigator, said a reimbursed user based on the 2019 crypto conversion might receive 23% less than the actual present value. However, if BlockCAT succeeds in convincing the court to use the February date for payments, the asset pool's share to be paid to the affected users in CAD claims will rise.

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