Vancouver-based cryptocurrency exchange QuadrigaCX has been defending itself in court for the release of $28 million dollars in customer funds frozen by the Canadian Imperial Bank of Commerce (CIBC) since January, the Globe and Mail reports.
According to court documents filed by CIBC in the Canadian province of Ontario, the action to freeze the accounts was taken because the bank says, “it was unable to determine who owns the funds,” and would like the court to take possession of the money and distribute it to either QuadrigaCX, their payments processor Custodian Inc, or to the 388 affected Quadriga customers, the Globe and Mail writes.
Entrepreneurs in the relatively new crypto sector industries complained for some time about bank non-cooperation.
The cryptocurrency press in South America has reported on numerous account closures by banks against crypto exchanges on the continent, some of which are now being contested in courts by, among others, exchanges like Walltime in Brazil.
Sources within the Toronto crypto entrepreneur scene say they have suffered persistent problems with getting their businesses banked in the city- even at credit unions- and have resorted to advising one another never to use the words ‘Bitcoin’ or ‘cryptocurrency’ when trying to establish business accounts.
Banks, for their part, have explained their reluctance to do certain types of business with crypto firms based on concerns about money laundering, etc.
In emails to customers in April of this year, Quadriga blamed long delays in cash withdrawals at the exchange on problems it was having with account closures at another bank, the Royal Bank of Canada (RBC).
When asked about Quadriga’s and other entrepreneurs’ claims of sector non-cooperation by banks, RBC spokesperson Shauna Cook cited the bank’s concerns about, “regulatory, risk and external environmental factors around cryptocurrency,” but only with regards to her bank’s refusal to process crypto-related transactions involving Visa and Mastercard.
Ms Cook added, “We recognize that the cryptocurrency environment continues to evolve and we will continue to monitor these factors going forward.”
The Globe also reports that in emails explaining delays to customers, Quadriga has alleged that the “Canadian banking cartel” has been “conspiring” against the industry to “stifle bitcoin adoption” in Canada.
The Globe cites court documents in which Quadriga claims to be, “the undisputed owner of the majority of the (frozen) funds…and alleges it is being unfairly targeted because of the stigma surrounding cryptocurrencies, which have earned a reputation as being a haven for money laundering.”
A lawyer for Quadriga says that the case brought against it by CIBC was heard over the summer, and a judge is presently deliberating.
Regarding the case and the general business environment for crypto firms in Canada, Quadriga CEO Gerald Cotten told the Globe and Mail, “The number of individuals in the bitcoin community that have been shut out of the banking system is staggering.”
Four-out-of-five of Canada’s big banks reportedly declined to comment on The Globe story, and one failed to respond.