Law firm Stewart McKelvey will no longer be serving as representative counsel in the succeeding legal proceedings involving Canadian cryptocurrency exchange QuadrigaCX.
On Wednesday, Miller Thomson sent a letter to QuadrigaCX creditor, informing that Stewart McKelvey would no longer be representing the exchange due to conflict of interest stemming from the law firm’s current role as legal representative for Jennifer Robertson, the widow of the late Gerald Cotten, founder of QuadrigaCX.
During the recent creditor protection proceedings on March 13, Stewart McKelvey withdrew from representing the exchange, citing a “potential conflict” raised by other parties, including court-appointed monitor Ernst & Young (EY).
However, according to the letter published on Telegram and verified by one of the law firm’s attorneys, both EY and the exchange’s other representative counsel had concerns with the fact that Stewart McKelvey was both serving as Quadriga and Robertson’s legal counsel.
As indicated in the document:
“Representative Counsel sent two letters to Applicants’ Counsel expressing discomfort with the conflicts of interest presented by Stewart McKelvey’s representation of both the Applicants and Ms. Robertson. The Monitor expressed similar concerns. We advised Applicants’ Counsel that, in our view, this represented an irreconcilable conflict that needed to be addressed without delay.”
While the firm claimed at the time that it had no idea what the conflict was but was nonetheless planning to submit a proposal to address the raised concerns, Stewart McKelvey’s attorneys “eventually acknowledged the conflict,” and had subsequently withdrawn as the exchange’s legal counsel “after repeated follow-ups.”
While Stewart McKelvey would no longer serve as QuadrigaCX’s representative counsel, the law firm would still be continuing its representation of Robertson, who now serves as executor of Cotten’s estate.
On March 18, a conference was held between Stewart McKelvey, Miller Thomson, Cox & Palmer, EY, and Nova Scotia Supreme Court Justice Michael Wood to determine the next steps.
As noted in the letter:
“The parties expect to be back in Court to address the next steps in these [Companies’ Creditors Arrangement Act] proceedings as early as next week.”
In late January, Stewart McKelvey filed for creditor protection on behalf of QuadrigaCX, at the time when it was initially disclosed that the exchange lost approximately $136 million in digital assets purportedly kept in QuadrigaCX’s cold storage, to which only Cotten previously had access.
From thereon, the law firm served as the exchange’s legal representative until earlier this month when it subsequently withdrew from the case.