Ernst & Young (EY), trustee of the closed QuadrigaCX crypt exchange, will pass on its client data to the Canadian Revenue Service (CRA).
EY reported this week that CRA has asked for information about QuadrigaCX, whose clients have been waiting for more than a year to return $190 million, most of which is not yet available.
The information requested by the IRS includes financial statements, corporate legal records, documents relating to contractors and other related parties, a list of accounts and purse addresses, details of user-owned fiat currencies and crypto assets, analysis of user transactions and verified accounts.
"The trustee told CRA that he intends to provide a copy of the full EDiscovery database, edited only in terms of non-disclosure, in response to an IRS request," according to the latest EY report.
The database includes users' personal information as well as account balances and transaction data. According to the last EY report, the database contains 750,000 separate documents.
At the time of closure, QuadrigaCX had 115,000 users with funds on the platform. Miller Thomson, a law firm representing former QuadrigaCX users, said it would not oppose EY's decision to reduce costs and expedite distribution of funds to users.
Members of the creditors' committee - several former QuadrigaCX users who represent all clients in discussions with Miller Thomson - had different views on potential privacy issues when sharing this information with the CRA.
"Among other things, the committee members discussed in detail issues relating to sharing information with CRA, the protection of that information, the nature of the personal information in the database and the reasonable expectations of the victims," the letter said.
One member of the Committee, Magdalena Gronowska, wrote on Twitter that the CRA request was "an unprecedented invasion of privacy".
"I am concerned that this is like an attempt to collect compromising materials," she said.
Hronowska explained that EY had already stated in the past that it was difficult to calculate tax liabilities. This calls into question the need to provide CRA users' data for calculating exchange debt. The Tax Service of Canada was interested in the activities of the exchange last September.
QuadrigaCX ceased operations under mysterious circumstances. According to official information, the founder of the platform Gerald Cotten died suddenly in December 2018, and on January 28, 2019 the exchange went offline. In April QuadrigaCX was declared bankrupt and a month later the court temporarily released the exchange from prosecution of creditors.
Last summer it became known that the founder of QuadrigaCX had used clients' money for personal trading on other exchanges, and earlier this year, QuadrigaCX clients' lawyers demanded an exhumation of Cotten's body.
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