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Abu Dhabi, UAEMonday 18 February 2019

Crypto firm Quadriga's shutdown leaves client Dh1.5m out of pocket

Like some 115,000 other customers of Canadian company whose assets are now 'inaccessible', Tong Zou has not received his money

Cryptocurrency mining rigs. QuadrigaCX says it cannot access customers' cash after chief's unexpected death. Bloomberg
Cryptocurrency mining rigs. QuadrigaCX says it cannot access customers' cash after chief's unexpected death. Bloomberg

Tong Zou wasn’t a stereotypical crypto bro bent on accumulating flashy trophies such as Lamborghinis when he deposited his life savings into Quadriga CX’s digital exchange.

The 30-year-old software engineer, who’d been working in California for seven years, just wanted to save a few bucks on transfer fees after deciding to move to Vancouver. It proved to be a C$560,000 (Dh1.59 million) mistake.

"It’s all my savings, so I’m just living on what little I have left and trying to start over," Mr Zou said in Vancouver, where he has been living out of an AirBnB for the past month. “It pretty much took everything away from me."

Mr Zou is one of Quadriga’s 115,000 clients who are out of luck after the sudden death of the firm’s founder left C$190m in cryptocurrencies protected by his passwords unretrievable. The exchange has halted operations and was granted protection from creditors on February 5 in Nova Scotia Supreme Court in Halifax, according to Bloomberg.

Canada's main securities regulator said on Friday that it was looking into Quadriga CX.

"Given the potential harm to Ontario investors, we are looking into this matter and have already been in contact with the monitor," the Ontario Securities Commission said.

That came after the British Columbia Securities Commission, the province's securities regulator, said on Thursday that it does not regulate Quadriga CX, Reuters reported

The regulator said it has been aware of the company's operations since 2017 but has not had any indication that it was trading in securities or derivatives or if it operated as an exchange, which would put it under its purview.

"As such, BCSC does not regulate it," spokesman Brian Kladko said in an email.

The Canadian Securities Administrators, an umbrella organisation for the country's provincial securities regulators, said no crypto-asset trading platform had "been regulated as a marketplace by Canadian securities regulators".

Mr Zou considers himself "one of the largest affected individual users" - according to an affidavit he filed last week as part of the court proceedings. He bought Bitcoin in the US and transferred it over to Quadriga CX and immediately sold it for Canadian dollars, which was supposed to be deposited into his Canadian bank account. That was in October. He’s still waiting.

“I wasn’t using it for trading - I just wanted to move my money over to my Canadian bank account," Mr Zou said. “What I didn’t know was that my withdrawal would be pending or incomplete and it never got deposited in my bank account. I’ve been waiting four months so far."

“A lot of other people are in the same situation as me," he said.

That money was going to help him settle back in Canada, after being away for years. Mr Zou, who grew up in Orillia, Ontario, had moved to the US after graduating from the University of Toronto in 2011. He spent the next seven years working as a software engineer around San Francisco at companies including BitTorrent, Walmart and Spigit.

“I was going to use that money for a deposit on an apartment, but now I can’t do that anymore," Mr Zou said. “And now I’m currently searching for a job, so it’s kind of a bad time for me."

Mr Zou has been coordinating with other affected users online through the Telegram messaging app, and turned to Bennett Jones and McInnes Cooper to represent him and others in Quadriga’s creditor protection proceedings in Halifax.

"I just got caught up in this at the wrong time, I guess."

Updated: February 10, 2019 03:17 PM

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